This posting is the first of a series in which the writer is
going to, in real time, develop a unit of study. The unit will be, appropriately enough for
this blog, a civics unit. The planning
will attempt to apply federation theory as a social construct. As such, the theory will guide the writer in
his choice of content. This
effort/experiment, as just mentioned, is in real time. That is, he will conduct some research
between postings regarding the topic and attempt to incorporate what he has
found out in the next posting.
The writer has
done this sort of thing plenty of times, but never in a public forum such as
this blog. He, of course, planned
countless units and lessons as a classroom teacher and even got paid to do it
as a consultant for one or two organizations.
Since this is a demonstration of how the process works for him, he will
make several assumptions.
One, the initial knowledge of history
and the social sciences he will use in this development exercise is what he
believes the typical social studies teacher already knows. He might cite a source that he is aware of to
further bolster a point, but unless attributed to the Alden source below, it is
general knowledge.
Two, all other
knowledge that the writer will incorporate is contained in one source: Failure
to Adjust: How Americans Got Left Behind
in the Global Economy by Edward Alden.[1] This would not be the case in “real life” and
the writer would use a variety of sources such as news accounts and journal
articles – he might use a film (a documentary) and even literature such as a
novel. Of course, the attempt would be
to use reputable sources unless a special purpose was to report what public
opinion is about the topic.
So, with those introductory words, the
process begins by first identifying the topic and reporting why it was
chosen. The topic is foreign trade and
how it has affected the fate of significant number of Americans. As was previously explained, most topics that
federation theory would guide an educator to pursue will be a concern reflecting
an equality issue. This is not always
the case, but chances are if a unit developer uses federation theory, that will
be the overall concern. That is the case
with foreign trade as will be explained.
A typical understanding of American
history reveals that this was not so much a dominant area of concern as the
nation approached World War II. The US
economy, in those years, was only involved in foreign trade at a rate of less
than 10 percent of GDP. Oh, years prior
to the beginning of the Civil War there was a heavy reliance on imports and the
South’s economy was almost totally dependent on exporting cotton.[2] But the Civil War and the rise of
industrialization changed the economy profoundly and by the end of the 19th
century to about the end of the thirties (of the 20th century), the
US had become an autarky.
A what? This is a new term for the writer as
well. An autarky is an economy that is
totally or just about totally self-reliant.
The American people just about provided all its natural resources, just
about produced all they consumed, and just about provided all the labor they used
to produce what they needed or wanted.
The writer’s general knowledge also tells him that World War II caused
certain processes and developments to take place and change the conditions that
existed before the war. In the ensuing
years, the US shed its autarky status.
As early as 1944 (before World War II
ended) there was the Bretton Woods Conference and it was conducted to establish
international agreements that had profound effects on foreign trade and the US
participation in it. This is an item
that needs further investigation.
The
writer is also presently aware that since the US was the only leading
industrial nation not suffering from extensive damage due to the war, it had to
take the lead in reestablishing the industrial capacity of those other nations
that were extensively affected by the destruction of the war. The industrial capacity of those nations was
severely curtailed.
This
led to a general trend toward liberalization of trade polices among
nations. Generally, that meant that
nations lowered tariffs, the tax that is placed on imports, loosened trade
restrictions, and was to institute floating currencies – that is, the value of
any currency was to be set by market forces.
This
last move is very important since all trade is conducted by the currency of the
selling nation. If someone in Japan wants
to buy a Chevy (ha, ha), he/she needs US dollars (or his or her agent needs US
dollars) to buy that Chevy. That is of
course if the Chevy is made and/or sold from a US car company. Therefore, the exchange rate of that currency
affects what the buyer pays.
To
get back to liberalization, what was to be set up was a global system in which
buyers and sellers of finished products, intermediate products (parts, tools,
and trade services), and labor could be bought, hired, or leased across borders
with increasing ease. The new set of
policies – international agreements – paved the way.
This
whole development was magnified many times with advancements in technology
especially in terms of communication, transportation, and those technologies
that assist the processes from production to legal services. The role of the computer – introduced since
World War II – is central. Someone who
gives a good accounting of all this is Thomas Friedman.[3]
Things,
given the conditions of the post war period and the advantaged position of the
US, was going along swimmingly for about two decades. Then, things began to go in the wrong
direction for the US – at least for segments of the US economy. Chief among those segments was men who worked
at manufacturing jobs.
Suddenly,
with the rise of what used to be called third world countries or countries
heavily damaged by the war (e.g., China and Japan), American workers were competing
against low wage workers of foreign countries.
And this brings one to what began to change – the introduction of
negative conditions – in the late 1960s that interfered with US interests. A turning point (or year) was 1971.
The
first negative condition was just mentioned, expensive labor costs. This was not bad while the US was an autarky,
but times changed. Just to give the
reader an idea, average wages in the US, according to Alden, rose 75% between
1947 and 1973. Many factors led to this,
but chief among them was the rise of labor unions. Great for workers if they only competed against
other high payed workers, but beginning at that time, cheap labor in foreign
lands became a factor.
The
second condition was that the US was on the gold standard – at about $35 for an
ounce of gold – and that made the US dollar a very expensive currency (and made
our gold very cheap). This led to
horrific trade imbalances – more on this in future postings. For now, it should only be noted that this
expensive currency made American products expensive in other countries.
So,
with cheap currencies abroad (in part due to US dollar being excessively
strong), this set up the third condition, increasing imports. In the 1970s, imports more than doubled. By the end of that decade, foreign goods and
services accounted for about 20% of the US economy. This was true while US products abroad were
not so popular; they were judged to be expensive and not of the best
quality.
One
number that stands out is that 20% of US steel consumption by the end of that
decade came from foreign producers. Yet,
US produced steel accounted for small consumption levels in other
countries. The same story can be told
for textiles, clothing, radios, and TVs.
Subsequent years would see a deluge of foreign cars in the US while
American car producers were struggling with inferior models and expensive
products.
And
American interests overseas also included the escape of investment capital from
the US to other countries. US investment
abroad in the 1960s was less than $34 billion; by 1980 it had ballooned to $216
billion. A lot of that investment was
motivated with the cheaper production costs found on foreign shores.
All
this was taking place while real wages in the US first stopped growing and then
began to fall, especially among – the reader can guess – male, manufacturing
workers. Overall, several developments
were taking place:
·
the pressures from foreign trade prompted
American manufacturers to lower costs in the US (including wages),
·
capital flight relative to prior levels was
taking place,
·
and shaky economic conditions that
encouraged enormous rise in personal debt would later feed the conditions that caused
the Great Recession of 2008.
This,
therefore, establishes the stage for studying this topic and reflects what most
social studies teachers know of the topic area before any real research of the
topic occurs. The big question is: given the advantages the US enjoyed at the
beginning of the 1960s, how did it let things get so bad that not only the
Great Recession took place, but has led to the civic turmoil the nation is
currently facing? To repeat: stay tuned.
[1] Edward Alden, Failure
to Adjust: How Americans Got Left Behind
in the Global Economy (Lanham, MD: Rowman
and Littlefield Publishers, 2016).
[3] Thomas Friedman, The
World Is Flat: A Brief History of the
Twenty-first Century (New York, NY: Farrar, Straus and Giroux, 2005).
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