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.

EXCESSIVE MARSHALL PLAN THINKING?

A way to develop a unit of study is to first identify an insight concerning the topic under study.  Such an insight should be the product of responsible research or journalistic work by a reputable source.  For this entry of this demonstration – a real time development of a course of study started several postings ago – the writer starts with the next – seventh – insight.

After World War II, the US actively provided assistance to get the economies of those countries devastated by the war viable again.  While this assistance was in part motivated by humanitarian goals, it was also encouraged by the expectation that those economies would be eventual markets for American products.  But to a great degree those nations, especially the defeated nations of Germany and Japan, did not open their economies; instead they instituted regional and nationalistic arrangements.  This, in turn, led to policies – tariffs, low currency valuations, and regulations – geared to promoting exports and discouraging imports.  This curtailed US’s ability to sell American made products in those nations.[1]

Lesson idea:  students test a hypothesis which states, if a nation builds up a lesser economically viable nation, it will be rewarded by the (re)vitalized nation becoming a market for its produced goods.  Such research would address related questions:  Have there been other cases other than the case of the US and the devastated nations of World War II in which a nation provided this type of assistance?  If so, what has been the results of such assistance?  Using the other cases, if they exist, can test the hypothesis.

          The eighth insight is:

The Marshall Plan type thinking, that called for a liberal, general foreign economic policy to Europe and Japan, initially reestablished the viability of the victims of World War II.  This was an attempt to employ the lessons of World War I when there was little concern for the fate of the losers and sowed the resentments leading to World War II.  But as the years since the end of the Second World War have transpired, this bias has been judged to have lasted too long.  Currently, any remnants of this thinking only lead to the detriment to those who apply it.[2]

Lesson idea:  The teacher assigns students to write an “editorial” or a “letter to the editor” reacting to this insight.  Said written product should cite supportive information from reputable sources.  This exercise can be used to instruct and provide practice in argument-building skills that utilize Stephen Toulmin’s model of argumentation (described earlier in this blog).[3]  As a reminder, this unit will end with a debate.  This lesson is supportive of that final activity.

          The ninth insight is:

After the initial period after World War II, in line with Marshall Plan thinking, there was a push to liberalize international trade – low tariffs, less regulations, floating currency valuations.  An example was the Trade Expansion Act (1962) pushed by the Kennedy Administration.  Generally, this period advanced the interests of certain economic entities such as import/export service industry, large corporate entities, technology industries, and retail industries.  On the other hand, certain labor interests, specifically manufacturing labor unions, were proved right when they foretold the act and similar policies would lead to losses of jobs to foreign countries.  There were even provisions in laws, such as in the Trade Expansion Act, to meet the challenges labor was going to face, but they proved ineffective.[4]

Lesson idea:  the Trade Expansion Act can serve as a case study.  The main question of this case is:  why weren’t the Act’s provisions to assist workers effective?  The answer to this question would provide a great deal of insight as to what determines policy in the American political system.  A study of the case, therefore, would be beneficial in developing an understanding of American politics.  This question can be assigned to a student, perhaps one who is a bit more sophisticated in this topic, who might express an interest in it; have him/her investigate; and then present his/her findings to the class. 

A possible source of information can be derived from interviewing a trade expert – perhaps a locally available professor or business representative that deals with relevant issues.  If this option is chosen, the teacher should insure that the student is well prepared for the interview – the student should not unnecessarily waste the time of an interviewee.

Now, this posting will provide a set of factoids. 

·        Americans aged 55 to 65 years old are the best educated people of that age bracket in the world.  Americans aged 25 to 34 are ranked 13^th in education attainment in the world.[5]

·        The US ranks 16^th in the world when it comes to the quality of its infrastructure.[6]

·        The US is last, by a long shot, among advanced nations in retraining its workers.[7]

This development process has a few more posting to go.  This writer will take this opportunity to remind the reader what this blog is attempting to do.  May it be said, the writer had misgivings when this demonstration started.  Real time development is chancy, in that the writer must write out all the ideas that go into this planning and he/she does not know if the idea will “bear fruit.”  In real life, this is done mostly by merely thinking out the options and readily abandoning an unproductive idea.  Hopefully, the reader is not thinking TMI (too much information).

          Another point to keep in mind; this unit of study is dedicated to foreign relations which would be the last unit of a civics course.  The instructional approach advanced by this blog – although the reliance on federation theory for content does not insist on a specific mode of teaching – is based on debate.  It presupposes that during the course students are trained in a debate protocol.  As the final unit, the assumption is made that prior instruction has prepared the student to perform the activities these postings will identify.

          To this point, this debate aspect has not begun, but in a not so distant future, a posting will begin that phase of the demonstration.  The reader is forewarned.

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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] Stephen Toulmin, The Uses of Argument (London, England:  Cambridge University Press, 1969).

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

[5] Ibid.

[6] Ibid.

[7] Ibid.

COUNTING ON A STRONG POSITION TOO HEAVILY

[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.

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[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 .

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

[6] Ibid.

IS GLOBALIZATION INEVITABLE?

IS GLOBALIZATION INEVITABLE?

To continue with this blog’s presentation of a unit of study development, this posting will begin with a list of more relevant factoids.  These following facts are offered because the developer judges them pertinent to the topic, foreign trade and that trade’s effect on job availability in the US.  Overall, this demonstration, which is in real time, is an attempt to share with the reader what a teacher would do to be able to present lessons that bring to the classroom content that is logically derived from the principles of federation theory.

          As suggested in the last posting, this instruction could be augmented by listing these facts on some visible area of the classroom, e.g., black/white board or on an overhead projector.  Another option would be to pass out, on a sheet of paper, each day – like a daily newsletter – a batch of information notices.  The last posting began this list, here are some more information points:

·        A 2016 Pew Research Center report stated that 203 of the 229 major U.S. metropolitan areas it surveyed between 2000 and 2014 showed a decline in the number of middle-class families. This results from families either moving up the socioeconomic ladder due to securing work in more specialized jobs paying higher income or them falling into a lower-income bracket often due to losing a middle-class income jobs such as in manufacturing.[1]

·        Middle-class households’ income has nominally risen modestly, but in inflation-adjusted basis are stagnant during the years from 2000 to 2014.  This reflects what has been going on for decades stretching back to the 1960s.  That is, when factoring in the effects of inflation over 50 years (1964-2014), real wages grew by less than 8% – this is a yearly rate of 0.16% and is considered stagnant growth.[2]

·        Certain costs, that are relatively important to quality of life, have been facing inflationary growth.  Specifically, college costs and medical care costs outpaced Consumer Price Index (CPI) between 2005 and 2015 except for one of those years.  For example, between 1978 and 2008, college tuition rose 1,120%.  Of course, a college education is even more important when manufacturing jobs are going abroad.  Medical care is essential for good health and, in turn, to allow for a person to be competitive in a job market.[3]

·        The debt levels of the average middle-class household are significantly high.  For example, in 2013 it is nearly twice as high as it was in 1989 at a rate of 122% of annual household income.  High debt levels make it more difficult to save for retirement.  Also, a loss of a job and/or a downturn in the economy would be more detrimental with a high debt level to satisfy.[4]

This posting will now return to the other path this development is taking; that is, identifying relevant insights and lesson ideas that informs or otherwise engages the student to reflect on the significance of the insight.  To this point, the development has identified three insights (in the last posting) with accompany lesson ideas.  Here is a fourth:

The economic shortfalls to certain groups of workers in the US is not due to globalization – the overall policy set that encourages and enables foreign trade activities – but the inability or aversion of the US government to adjust to the newer economic realities attached to globalization.  One can argue that given the technological advancements that facilitates foreign trade and the aspirations of poorer countries – with their supply of cheaper labor – one can say, globalization was inevitable.[5]

A lesson could begin by holding a question and answer session with the class that begins by the teacher asking students to imagine they are an owner of a business that meets a payroll.  The teacher basically poses the following questions:  Would they do X if by doing so they would drastically lower a cost of production?

Would they do X if it means their present employees will lose their jobs?

If they do not do X and their competitors do X, allowing the competitors to drastically lower the price by which they sell their goods, would that further encourage them to do X? 

The point of this q & a is to see how overwhelming the argument is to move a business to another country – or to at least move the manufacturing element of their business – when the other country has large numbers of people willing to work for a mere fraction of what American workers earn.  In the underdeveloped nations of the world there are many workers who are willing to work for these lower wages.

For example, a country where many products today are produced that were produced by US plants in the past is China.  Recently, China’s wages have experienced healthy increases, but as late as 2015, the average yearly salary among 32 major cities in China was 6,070 yuan which equates to $922.64.  Stated another way, based on a 40-hour week and a year with 250 days of work (50 weeks x 5 days a week), that rate of pay equals less than ten cents an hour.[6]

The teacher can also point out that modern technologies – mainly all the activities that the computer allows business people to perform today – the whole prospect of shifting one’s manufacturing needs to far off lands has become relatively easy and cheap.  Of course, this insight further makes the case that global trade and its proliferation in the years since the early 1970s was inevitable.

With that lesson idea, this posting will now shift gears and offer a conceptualization lesson idea.  There are three key ideas or concepts a study of international trade needs to operationally define.  They are comparative advantage, productivity, and balance of trade/payments.  Each of these ideas is a sub idea of a more encompassing idea. 

So, for example, comparative advantage is a sub idea of the idea, trade.  Starting with the “larger” idea, like trade, the teacher writes the verbal symbol of the idea on the board (e.g., writes “trade” on the board) and begins asking students a series of questions that are meant to have them conceptualize the larger idea by using inductive reasoning.

With the verbal symbol on the board the teacher first asks:  what do you know about this larger idea (trade)?  The teacher writes on the board what the students suggest – perhaps he/she uses short hand to advance the process.  Using his/her judgement, the teacher ends this phase and then asks:  which of these ideas go together?  The teacher should remember, the aim is to get the students to identify and define the sub idea that is the purpose of the lesson.  In terms of trade, that can be comparative advantage or balance of trade/payments.

After the group of ideas are formed – each can be considered attributes of the larger idea – the teacher can ask:  how would you label each group?  The label identifies a title for the attribute.  Then take the attribute that comes closest to the targeted sub idea – relative advantage, balance of trade/payments, or productivity – and through directed questions arrive at a definition for each.

To make this a bit clearer, here are a definition for each: 

·        Comparative advantage is that advantage in a trade exchange when the degree to which a product or service is more advantageous to the customer(s) than a competing asset or product. 

·        Productivity is a measure of the value of a production process relative to the costs or depletion of assets used to produce a good or service in question.  It can also include the same measure for collective production, e.g., the productivity level of a nation’s economy.  An added concern with productivity is that since labor usually accounts for businesses highest cost factor, cutting labor costs most significantly raises productivity assuming the same amount of goods are produced.

·        And balance of trade/payments is the difference in value – money amounts – of goods and/or services that are exported (a positive amount) and imported goods and/or services (a negative amount).  This is usually applied to the balance of trade for a nation’s economy.

These definitions can be a bit sophisticated for a high school class.  To give them a more understandable language, a short story type example for each can be helpful.  In terms of comparative advantage, for example, the teacher can provide the following:  suppose there is a highly skilled physician who can also type 130 words a minute.  Should he/she hire a typist, who probably types at a rate of say 70 words a minute, to type out his/her reports? 

This was better example before word processing came about, but it probably still stands.  The answer to the above question, using comparative advantage, is no.  Why?  Because to do his/her own typing, the doctor would have to sacrifice time in which he/she can make a lot more money than he/she would spend hiring a typist to do the typing.

Therefore, in terms of the typist, he/she has a comparative advantage over the doctor in terms of typing.  This is true even though the doctor has an absolute advantage over the typist in terms of typing – 70 words a minute vs. 130 words a minute.

This idea is important in international trade in that it helps to explain why some countries that have absolute advantages in the production of some goods, will import those products from countries that have a lower level of absolute advantage in the production of those products. 

The question or concern becomes:  what does the one country give up – opportunity costs – in producing that good?  In the conceptualizing exercise described above, perhaps the teacher can use the doctor/typist example to guide the student to this realization and gain further understanding of the idea, comparative advantage.

This posting is getting a bit long, so this demonstration will be picked up in the next posting.

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[1] Sean Williams, “7 Reasons the Middle-Class Is in Serious Trouble,” The Motley Fool, September 22, 2016, accessed September 28, 2016, http://www.fool.com/investing/2016/09/17/7-reasons-the-middle-class-is-in-serious-trouble.aspx .

 [2] Ibid.  In nominal (unadjusted for inflation) terms, wages rose over 700% during the years between 1964 and 2014.  This finding is based on statistics offered by the Bureau of Labor Statistics.

 [3] Ibid.

[4] Ibid.

 [5] Edward Alden, Failure to Adjust:  How Americans Got Left Behind in the Global Economy (Lanham, MD:  Rowman and Littlefield Publishers, 2016).

[6] Wu Yan, “Average Salary in Major Chinese Cities Is $900 and Growing,” China Daily, accessed September 7, 2017, http://www.chinadaily.com.cn/china/2016-01/21/content_23183484.htm .