With this posting, this blog completes a development phase for
a unit of study in a civics course at the high school level. This is a demonstration for purposes of
sharing with the reader what a teacher might consider in devising a civics unit
using federation theory as a guiding perspective. The series of postings so dedicated reports,
in real time, the writer’s effort to identify the content of the unit. That content consists mostly in a listing of
insights – sixteen to date. This entry points
out the two final insights.
The
seventeenth insight is:
In trying to nurture domestic businesses – so that they can bolster their
prospects in foreign trade – the national government invests in education,
invests in infrastructure, and subsidizes research and development.[1]
Lesson idea: This
insight is alluded to in other previously identified insights, but it is felt
that its explicit value – advancing the competitive abilities of a nation’s
businesses – needs to be stated clearly and unequivocally. The aim here is to have students make the
conceptual distinction between these set of policies and those that distort
market mechanisms.
This nurturing approach, it might be
argued, also distorts market mechanisms in that they are government operations,
but there is a difference. These
nurturing strategies do not artificially affect the demand or supply of the
goods that are bought and sold in foreign trade markets.
But when a nation, for example,
manipulates that nation’s currency (one of several activities that a government
can do to affect supply and demand), it directly increases the demand for its
exports – by making them cheaper – and lowering the demand for imports – by making
them more expensive. This is not
nurturing, it’s “stacking the deck.”
As such, this latter strategy – what might
be called anti-competitive strategies – is by some accounts unfair. The question becomes: should the victim of such nefarious policies
counter them with similar moves? If so,
does it lead to just a circular anteing up of such actions; e.g., higher and
higher tariffs or more manipulation of currencies or more direct subsidies?
In terms of instructing this insight,
it can be added to how the thirteenth insight is taught – see previous posting
– where students research anti-competitive strategies such as subsidies. The teacher can ask students how nurturing
strategies are similar and dissimilar to anti-competitive strategies.
The eighteenth insight is:
In international trade, if a nation’s
products are losing favor among customers, then its national currency will lose
value. Why? Because one needs that nation’s currency to
buy that nation’s products and if less people are buying its products, they
need less of that currency – lowering its demand.
When the value of a currency goes
down, though, then it takes less of another nation’s currency to buy that first
currency. This, in effect, lowers the
final price of that first nation’s products.
They become cheaper and, therefore, will be in more demand as time goes
by.
The opposite happens when a nation’s
products become more favored by customers.
Currency value of the nation goes up, those products become more
expensive, and the demand for the products goes down.
In short, if currencies values can float
according to market forces, they will act to stabilize the balances of
trade/payments among nations. But when a
nation manipulates its currency, that policy aborts the market from arriving at
such a balance.[2]
Lesson idea: Teacher
can devise a simulation activity in which goods are sold using artificial
currencies. There can be three nations
and each nation sells one or two products.
Each nation has a currency and this currency needs to be “bought” by
foreign actors to buy that nation’s product(s).
The simulation is set up so that demand for the various currencies are
established by the money sellers determining how much of another nation’s currency
is needed to buy that currency.
To simplify the simulation, product
prices are fix and the only variation occurs with the prices of the currencies
going up and down. Also, to simplify the
simulation, a “central bank” can be the agent that buys and sells
currencies. The details of such a
simulation need to be worked out. For
example, the simulation can take on a game structure with winners and losers.
That ends this phase in which the
developer identifies the content of this foreign trade unit along with the
various lesson ideas that might lead to actual lesson plans. He will next address the instructional
structure the unit will take. This will
be done in the next posting.
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