RESTRICTIVE OR LIBERALIZED

The development of a unit of study continues with this posting.  The reader who has not been reading this blog of late should know that it is, in real time, reporting on the development of a unit on foreign trade and how that trade has affected the availability of jobs in the US.  To date, this account has identified twelve insights regarding this topic and has reported on lesson ideas for each of the insights.  This posting picks up on this development.

          The thirteenth insight is:

Often in American discourse concerning international trade, it is portrayed as a zero-sum competition.  This is the case due to the loss of manufacturing jobs to other countries.  But there have been positive results due to this trade.  For example, in the last two decades there has been more people rising out of poverty, worldwide, than ever before.  Unfortunately, this has been accomplished by nations ascribing to “beggar thy neighbor” strategies.  To heighten their exports, nations, such as China and Japan, have subsidized their companies, instituted restrictive regulations to discourage imports, and have manipulated their currencies.  In short, they have distorted market forces, but the irony is, in the extreme, these policies hurt these countries long-term interests such as in consumer demand.[1]

Lesson idea:  Teacher writes on board the following strategies:  restrictive regulations, subsidizing businesses, and manipulating currencies.  For each strategy, students investigate and answer these questions:  how is this strategy done?  How does it lead to short-term advantage?  How does it pose long-term disadvantages?  How does it distort market forces?

The fourteenth insight is:

In counter distinction to the distorting policies utilized by Asian countries and identified in the thirteenth insight, European countries use more pro-market strategies.  They rely mostly on nurturing their businesses and training their workforces.  This approach is particularly seen in the Nordic countries (Denmark, Finland, Sweden, Norway, and Iceland).[2]

Lesson idea:  Students, using the same questions as were used for the thirteenth insight, investigate the significance of this insight.  What needs to be spelled out is:  how does a national government “nurture” domestic businesses, especially in the manufacturing sector?  There are other insights in this unit that provides information on this account. 

What seems to be central to a nurturing approach is a strategy that avoids direct subsidy and instead focuses on creating a fertile environment of entrepreneurial factors.  See internet site:  https://www.weforum.org/agenda/2014/12/6-ways-governments-can-encourage-entrepreneurship/ .  Another country that can be added to a list of nurturing countries is Germany.

The fifteenth insight is:

In the US, while the federal government is mired in debating its proper role, state governments have become very aggressive in competing for jobs, especially in the manufacturing sector.  South Carolina is a good example of this.  Some strategies are aimed at luring such jobs from other states.  This approach is particularly true in the south where they rely on being “right-to-work” states (a provision of the Taft-Hartley Act that diminishes the bargaining position of labor unions).  Of course, such moves do not help the over welfare of the American economy.  Other strategies include tax incentives (mostly tax reduction plans); but best of all are investments in infrastructure (highways, bridges, communication facilities, schooling and training facilities, etc.).  Also in this pursuit of businesses and investment are larger cities. 

In the extreme, subsidies can prove to be hurtful by its diversion of public funds from needed public services and reliance on “right to work” provisions can hurt manufacturing workers as they lower wages and weaken legitimate union representation.[3]

Lesson idea:  Students are assigned the reading, “Government Subsidies for Business,”[4] by Marc Davis and prepare to discuss the question:  State governments should provide businesses subsidies:  yes or no?  The teacher should be prepared to play devil’s advocate; i.e., argue the opposite of what students argue.  So, if the student argues it is good for state’s economy to subsidize a business (it provides jobs), the teacher can point out it also siphons public funds away from needed services, such as education.  A source of information concerning “right to work” laws is an internet site that presents AFL-CIO’s position on this legislation.  See https://aflcio.org/issues/right-work.

          Sixteenth insight is:

With President Trump threatening, during his campaign, to institute protectionists polices against such countries like China, there have been some worrisome reactions to such a move.  The argument goes that it is a bit short-sighted to blame China, for example, for the loss of jobs in the US.  A more significant factor are the advances in technologies.  This includes advances in artificial intelligence, automated and electronic manufacturing and management.  The result has been higher levels of efficiency and productivity through the ability of companies to eliminate manufacturing sector jobs.  The implication is that if the US engages in a trade war with China, this will hurt Americans.  A better solution is increasing exports to China especially in high-tech products such as in aviation technologies.[5]

Lesson idea:  this insight is favoring trade with China and can be used by those who favor globalization.  The teacher can ask students to assume the role of a labor leader in the US.  As established in another insight previously cited, labor leaders have been generally against liberal foreign trade policies.  What arguments can a labor leader make that would rebuke the general thrust of this insight? 

Students, from the perspective of a labor leader, formulate a list of supportive backing statements for more restrictive policies against trade with China and other nations that are emulating China’s strategy; e. g., South Korea and Vietnam.  Following are two factoid statements that relate to this insight and can be used in this activity.

·        There has been a reduction in average labor needed to produce a car from .1 in 1999 to .07 in 2014.  This reflects the manufacturing processes have turned to the use of machines and robots to do what workers did in the past, at least, in the auto industry.  Similar developments can be found in the machine and chemical industries where job availability have grown slowly and, in some cases, has declined in recent years.[6]

·        China has an increasing demand for high-tech civil aviation, machine tools, integrated circuits, and other high-tech goods and will reach $600bn by 2020.  This is a fraction (1/2) of the current (2015) trade deficit with China.  But this calls on the US to ease high-tech trade restrictions to China.  The fear is the stealing of intellectual property.[7]

It is anticipated that this phase of this development – identifying the unit’s content – will be completed in the next posting.   Then the development will shift its focus to the instructional strategy for the unit.  The development marches on.

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[1] Edward Alden, Failure to Adjust:  How Americans Got Left Behind in the Global Economy (Rowman and Littlefield, 2017).

[2] Ibid.

[3] Ibid.

[4] Marc Davis, “Government Subsidies for Business,” Investopedia, accessed September 21, 2017, http://www.investopedia.com/articles/basics/11/introduction-to-government-subsidies.asp .

  

[5] Wang Wen, “A US-China Trade War Would Cause Huge Damage and Benefit Nobody,” Financial Times, March 27, 2017, accessed September 22, 2017, https://www.ft.com/content/3b49cd2a-10ad-11e7-b030-768954394623 .

  

[6] Ibid.

[7] Ibid.

THE FACE OF GLOBALIZATION

This posting continues what this blog is currently doing; that is, it is developing, in real time, a civics course of study on foreign trade and how that trade has affected the availability of jobs in the US.  To date, the blog has identified nine insights and related lesson ideas that potentially will make up the core of the course.  Of course, this is not a real unit; this exercise is for demonstration purposes.

          The tenth insight is:

Assisting the transfer of jobs abroad has been the rise of transnational corporations.  These corporations are global in operations and have increasingly acted beyond the legal authority of national governments in that they can readily shift assets from country to country.  Some make a distinction between multinational corporations (MNCs) and transnational corporations (TNCs).  The difference is a technical one; if the entity has identifiable headquarters in particular nations it is an MNC, if it doesn’t it’s a TNC.  In either case, their rise in economic and political viability has been made possible by liberalized economic policies since World War II, a lessening of nationalistic perspective in Western countries in favor of global perspectives, and freer market operations.[1]

Lesson idea:  Have students name a few products they like or find they buy regularly.  Teacher makes a list of these products.  The students are assigned to “Google” them and see what companies produce them.  Are these companies owned by other companies?  Where are these companies headquartered?  In how many countries are those companies doing business?  In other words, how expansive are these entities?  Hopefully, the student can begin to gain some understanding how transnational or multinational corporations have become central to the US economy and the economies around the world.  Discuss what political consequences such expansion can mean to the politics of any single country.  A film that is futuristic that taps into what the existence of transnational corporations can lead to is the 1978 offering, Rollerball.  Interested students might be assigned to see this film and report on its story line and its theme to the rest of the class.

          The eleventh insight is:

Globalization in trade has lowered consumer prices and increased the spreading of technology.  Often this has been to lesser developed nations.  The anticipation of these benefits played a significant role in encouraging lawmakers to pass legislation, like the Trade Expansion Act of 1962, that has made possible the resulting globalization of trade.  The voice that has consistently had major concerns over such developments have been the labor unions who predicted accurately the subsequent loss in manufacturing jobs to foreign countries.[2]

Lesson idea:  The fight over the North American Trade Agreement in the early nineties is a good case study of this insight.  Students could construct a timeline of that debate as a class effort.  The teacher on the black/white board draws a long line and underneath, toward the bottom of the board, writes in the name of every sixth months that covers the years from 1990 to 1994.  Students begin to fill-in the timeline with events that made up the debate over whether NAFTA would be established and become the international set of rules governing trade among the US, Mexico, and Canada.

          The twelfth insight is:

The Peterson memo, identified in a previous posting, warned the Nixon Administration of the impending global, competitive economy and that further recommended the nation’s federal government take an aggressive posture concerning investment in plant and equipment, research and development, public infrastructure, and better education and training of America’s workforce.  The memo was given a cold reception by Nixon’s State Department.  State saw it as too dismissive of the need to establish better relations with other nations, too nationalistic, and an encouragement to Congress to pass higher tariffs and restrictive regulations on foreign trade.  Some argue that State’s reaction was an example of Marshall Plan thinking being extended too long.[3]

Lesson idea:  The class or a group of students role-play a group of advisers who advise a leader of a European nation, say West Germany, or Japan back at the time the Peterson memo.  They illustrate or act out the advice they would give the leader as they “digest” the arguments contained in the memo.

          These three insights will do it for this posting.  Next, the developer wants to add a concept to the list of ideas this unit has identified as suitable for having a conceptualization exercise.  To date, the concepts, comparative advantage, productivity, and balance of trade/payments, have been highlighted.  To this list, he wants to add the concept, currency manipulation.  This can be added to the type of lesson identified for the other three in which students, using inductive reasoning, develop a list of attributes and form a definition.  To each one of these concepts, students can be asked:  what is the significance of this idea?

          With that, this entry describing the development of this course is completed.  There will probably be one or two more postings dedicated to this development.

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[1] Edward Alden, Failure to Adjust:  How Americans Got Left Behind in the Global Economy (Rowman and Littlefield, 2017) AND Wikipedia, “Multinational Corporation,” accessed September 18, 2017, https://en.wikipedia.org/wiki/Multinational_corporation .

[2] Edward Alden, Failure to Adjust:  How Americans Got Left Behind in the Global Economy.

[3] Ibid.