[Note: This writer owes the readers of this blog an
apology. For some unknown reason, he is
blaming age, he misidentified a concept related to foreign trade. The concept is comparative advantage and he
identified it as relative advantage. He
has corrected the error in the last posting.
He will take pains not to repeat such a mistake in the future. Sorry.]
To continue the
current demonstration this blog is reporting – a development, in real time, of
a unit of study regarding foreign trade and that trade’s effect on job
opportunities in the US – the next step is to identify additional factoids or
brief bits of information.[1] They are as follows:
·
Currently, on an average basis, jobs or
careers associated with exporting industries pay 20% higher salaries/pay than
those industries limited to domestically sold goods and services.[2]
·
In 1944, the Allied nations’
representatives met to iron out post war monetary policies. That meeting and its agreements have become
known as the Bretton Woods meeting/accords.
The chief features were an agreement
that each nation had an obligation to adopt a monetary policy that
maintained the exchange rate within a narrow range (± 1 percent). This was to be accomplished by tying each
nation’s currency to gold. The meeting
established rules and regulations to oversee foreign trade practices. It established a structure by forming the
International Monetary Fund (IMF) and an international bank. The agreement further tied currency rates to
gold which the US owned two thirds of the world’s supply and whose currency
value was set at $35 an ounce. That made
the US currency very expensive.[3]
In addition, the following set
of factoids is provided by The Office of Trade Representative, the Executive
Office of the President:[4]
(The following set of
facts are prefaced with a sort of editorial lead-in)
The United States is the world's largest
economy and the largest exporter and importer of goods and services. Trade is
critical to America's prosperity – fueling economic growth, supporting good
jobs at home, raising living standards and helping Americans provide for their
families with affordable goods and services.
·
The U.S. is the world's largest trading nation, with exports of
goods and services of over $2.1 trillion in 2011.
·
U.S. goods and services exports supported an estimated 9.7
million jobs in 2011.
·
Every billion dollars of goods and services exports supported
more than an estimated 5,000 jobs in 2011.
·
U.S. manufacturing exports supported an estimated 2.4 million
manufacturing jobs in 2009 (latest data available), 20 percent of all jobs in
the manufacturing sector.
·
U.S. agricultural exports supported 907 thousand jobs on and off
the farm in 2010 (latest data available).
·
Every billion dollars of U.S. agricultural exports in 2010
required 7,800 American jobs throughout the economy
·
US jobs supported by goods exports pay 13-18 percent more than
the US national average [this includes pay for non-exports job which lowers the
above 20% figure cited above]
·
Exports at 13.8% of U.S. GDP in 2011 – its highest share ever.
Trade expansion benefits families and
businesses [an editorial insertion] by:
·
Supporting more productive, higher paying jobs in our export
sectors
·
Expanding the variety of products for purchase by consumers and
business
·
Encouraging investment and more rapid economic growth
Trade keeps our economy open, dynamic, and
competitive, and helps ensure that America continues to be the best place in
the world to do business [an editorial insertion].
Again, the teacher is to simply distribute or visibly post
these bits of information so that it is visible to students. The purpose is to inform students of relevant
information.
The
demonstration will now share another couple of insights and an accompany ideas
for lessons. The fifth
insight in this demonstration is:
During
the 1960s, the “rise of the rest” took hold; that is, nations that were
devastated during World War II began to make meaningful comebacks. These nations were led by Germany and
Japan. Some today claim that the biggest
threat to the US has been the rise of these other nations and that, in turn,
their gains was served by the US failing to adjust to the changed conditions
around the world. Specifically, the high
value of American currency, the aid provided by the US, and the already
existing high levels of education in those countries allowed these other
nations to advance.[5]
Lesson Idea: The class engages in an inquiry that sets out
to answer the question: how can it be
that two countries that were heavily damaged by World War II became two leading
industrial countries by 1980? That was a
feat that was accomplished in less than 40 years! The inquiry can take the form of a compare
and contrast analysis between the development of the two countries. Wikipedia has two entries that might be
helpful: “Japanese Economic Miracle” and “History of Germany (1945-90).”
The focus of this analysis should be
the similarity between these countries in terms of the role US played in their
advancement. This should include
financial assistance, low tariffs on imports from those countries, low levels
of relevant regulations, and political and military protection.
A sixth insight is:
According to Peter George Peterson, an under-Treasury
Secretary in the Nixon Administration, wrote a famous memo pointing out that US
policy in foreign trade was highly deficient.
The memo made the claim that the US dominance in world trade, which was
well established by the results of World War II, was by then, 1971, over. The reasons were many, but underlying these
reasons was an arrogance by the US that determined all the US had to do to
maintain its vaulted position was to form the rules and regulations of
international trade. This was coupled
with policies that ignored the nation’s need to invest in competitive
industries and educate its citizens so that they would be able to compete
effectively in the newer economic conditions of the late twentieth and early
twenty-first centuries.[6]
Lesson Idea: This insight might be best handled by the
teacher making a reference to the Peterson memo as an ironic historical
development. Students in preparing the
argumentation of this unit might want to check this memo and how prescient it
was all the way back in 1971. Other than
its ironic quality, the insight, as stated, does not add any new causes to
current conditions or other useful information to the overall concern.
That will do it for this posting. Subsequent postings will continue this
demonstration.
[1] Apparently, the word, factoid, to some means trivial
information. That is not how the term is
used here. The emphasis here is on
brevity.
[2] Edward Alden, Failure to Adjust: How Americans Got Left Behind in the Global
Economy (Lanham, MD: Rowman and
Littlefield Publishers, 2016).
[3] “Bretton
Woods System,” Wikipedia, accessed September 11, 2017, https://en.wikipedia.org/wiki/Bretton_Woods_system
.
[4] Office of the U. S. Trade Representative, “Benefits
of Trade,” accessed September 11, 2017, https://ustr.gov/about-us/benefits-trade
.
[6] Ibid.
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