THE PETERSON MEMO DEBATED

This posting continues this blog’s reporting of a real-time development of a unit of study suitable for an American government course.  The course is aimed at high school seniors.  They usually take this course as a requirement for graduation and the course is a semester course, sharing its time allotment with economics, the other semester course.  This blog, to date, has posted three lessons – the first three lessons of the unit.  The unit is designed to be the last unit of the course.

This posting’s lesson is designed to complete the historical portion of the unit.  After World War II, the US was the super power in all aspects of global economics and politics.  The other advanced nations of the world experienced extensive damage due to the war.  Not so for the US.  It was left to the US to get the nations of the world to become viable again.  There were altruistic and selfish reasons to play that role.  After all, widespread poverty is disruptive and poor people can’t buy what one sells.  On both fronts, it was in the interest of the US to get the rest of the world back on its feet.

          Consequently, through various steps – e.g., Brent Woods accords, the Trade Expansion Act, international agreements such as NAFTA, generous foreign aid, and highly valuated currency – the US did much to enhance the fortunes of its allies and former adversaries.  As already pointed out, not all aided countries acted in ways the US anticipated.  These historical developments provide the context of this next lesson.

          To remind the reader, here is a restatement of the insights upon which this next lesson is based:

·        According to Peterson [of the Nixon Administration] memo, US policy in foreign trade was highly deficient and that the US dominance in world trade 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.[1]

·        The Peterson memo was judged by the State Department as being 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.[2]

LESSON ON THE PETERSON MEMO (initially sixth and twelfth insights)

Objectives:

* Given the prompt, describe and explain the historical significance of the “Peterson memo” during the Nixon Administration, the student will identify the general thrust of the memo as being a call for a change in foreign trade policy to one that recognizes the diminished status of the US in global markets.  It further suggests extensive changes in that policy to support education initiatives to prepare Americans to be able to compete in the newer economy; to adjust currency valuations of the US and other countries to improve America’s balance of trade/payments with other countries; to encourage improvements in American products; and for the US to become generally more competitively fit to meet the demands of the global markets.

* Given the critique of the Peterson memo – it is hostile to American relations with other countries – the student will take a defensible position as to the viability of the Peterson memo, stating his/her reasons for his/her support or opposition of the memo.

Lesson steps:

Pre-lesson.  See previous posting, “Setting the Problem,” October, 17, 2017, for this element’s description.  In this fourth lesson, the following factoids are distributed:

·        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 middle-class income jobs such as in manufacturing.[3]

·        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.[4]

·        Certain costs, that are relatively important to the 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.[5]

·        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.[6]

Also, the teacher identifies two teams of “debaters” to argue the measures contained in the Peterson memo.  Each team has three or four students.  For those students, they are assigned to become familiar with the Peterson memo.  They can have the planning insights concerning the Peterson memo given to them.  Perhaps, copies of Edward Alden’s book, Failure to Adjust, can be handed to each team with the parts of the book describing and explaining the Peterson memo pointed out.

Same day steps:

1.     Teacher hands out the newsletter for the day.  Students are given time to read the newsletter while attendance is taken and other administrative items are handled. (seven minutes)

2.     Teacher asks students if they have any clarifying questions regarding the newsletter.  Beginning with this lesson, there will be no follow up activity regarding the newsletter; its content provides further information relevant to the topic of the unit and subsequent activities. (five minutes)

3.     Teacher asks students to complete the previous day’s concept exercise.  He/she solicits, from students, acceptable idea chains.  An example could be:  trade deficit – balance of trade – import/exports – foreign trade.  Teacher determines who won the previous day’s competition if it wasn’t done at the end of that day’s class period. (ten minutes)

4.     Teacher gives a brief overview of the Peterson memo.  The purpose of this step is to convey to students two general dispositions to foreign trade.  One is represented by the Peterson memo which calls for a more competitive position in terms of foreign trade.  The other is conveyed by the State Department’s reaction to the Peterson memo.  State thought the memo, if heeded, would undermine the efforts of the US to have productive relations with other countries; hurt the development of poorer nations; and stand in the way for a more global perspective.  Each of these objectives were advancing peace and that thought was the product of the experiences of two world wars and what was becoming regional conflicts, e.g., Vietnam.  The teacher’s overview summarizes these points. (five minutes)

5.     Teacher organizes an informal debate over the content of the Peterson memo.  He/she identifies (predetermined) three or four students per side to argue for and against the content of the memo.  The State Department position can be the basis of the anti-memo argument.  Those students assume pre-arranged seating at the front of the class and debate the proposition: should the US government heed the policy proposals of the Peterson memo?  The debate is limited to each side making an initial argument statement. (twenty minutes or till the end of class period)

6.     Teacher briefly summarizes the arguments. (three minutes)

Assignment:  Given the summary the teacher provides, students take one of the conclusions the “debate” proclaimed and fill-in a Toulmin outline for an argument.  That is, the student provides datum statements, warrant statement(s), if possible, backing for the warrant statement(s), and any qualifiers or reservations the argument should include.  These work products will be collected at the beginning of the next class period (a graded activity).[7]

          That completes the fourth lesson in this unit of study.

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

[2] Ibid.

 [3] 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 .

[4] 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.

[5] Ibid.

[6] Ibid.

[7] Again, this type of exercise, it can be assumed, has been assigned earlier in the course.  Therefore, students should know what they are being asked to do.

IT’S NOT ALL GOOD OR BAD

What is education?  Any definition of this activity will include the notion that it is the imparting or the discovering of knowledge.  Knowledge, that is the knowing of truth, has been described as a structured, mental content.  That structure, commonly referred to as the structure of knowledge, has occupied the attention of some of the most prominent thinkers in the field of education.  That includes Jean Piaget, Lev Vygotski, and Jerome Bruner.  A more recent educator is H. Lynn Erickson.

A common description of this structure includes, in an order from the most concrete to the most abstract, the following:  facts, concepts, principles or generalizations, and theory.  This progression indicates that facts, logically associated, form concepts; concepts form principles or generalizations, and, one can guess, principles or generalizations form theories. 

It has been an interest of this writer how education, in the common mind of people, has been viewed the retention of facts with little concern for the more abstract levels of knowledge.  But that’s a topic for another posting.  Here, the concern is foreign trade and how that trade has affected the availability of jobs in the US.  This posting continues the development of a unit of study intended for a senior level American government course.  More specifically, it conveys a lesson that has students conceptualize a set of key ideas concerning the overall topic.

In previous postings, the developer identified three concepts:  productivity, comparative advantage, and balance of trade/payments.  This posting will add a couple more.  They are trade deficit and intellectual property.  Of course, the study of foreign trade, for whatever purpose, entails many more concepts, but these listed ideas have explanatory functions given the further aim of studying how that trade affects job availability.

To remind the reader, these are the definitions for the first three concepts:

·        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.[1] 

·        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 (or more) 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.

Trade deficit picks up on the idea of balance of trade/payments and focuses on a negative balance.  When a nation imports more than it exports, it sustains a trade deficit.  In turn, in calculating the gross domestic product (GDP), a trade deficit is subtracted from the other sums constituting the GDP (personal consumption expenditures, business investment, and government spending).  To those sums, one adds a trade surplus or substracts a trade deficit to arrive at the total GDP.

As for intellectual property, this idea is relevant to a hazard associated with foreign trade.  Specifically, one of the problems American companies have with exporting to certain countries, especially in high tech industry markets, is that the technological knowledge is stolen by analyzing the products.  A country that this has proved to be a problem is China.  Consequently, this has been a disincentive to trade with such countries.

Well, as the reader well knows, intellectual property is what is being stolen.  This takes the form of patent or copyright infringement.  Such pilfering can be over anything from product designs, process plans, organizational strategies, and the like.  In terms of this unit, the concern is on how intellectual property and how it is being abused influences foreign trade and foreign trade policy.

With that background, this posting is ready to proceed to share the third lesson plan of this unit.  As with the two previous two lessons, this one begins with the newsletter element which calls on a pre-lesson step.  But first, the lesson’s objective.

LESSON ON UNIT IDEAS

Objective:  Given an appropriate questioning prompt, the student will be able to arrange a set of ideas that logically forms a chain of concepts between a subordinate idea and a lesson idea (comparative advantage, productivity, balance of trade/payments, trade deficit, or intellectual property) or between a lesson idea and the concept, foreign trade.

Pre-lesson.  See previous postings for this element’s description.  In this third lesson, the following factoids are distributed:

·        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 assemblage and its agreements have become known as the Bretton Woods meeting/accords.[3]

In addition, the following set of factoids is provided by The Office of Trade Representative, the Executive Office of the President:[4]

·        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 was at 13.8% of U.S. GDP in 2011 – its highest share ever.

1.     Teacher hands out the newsletter for the day.  Students are given time to read the newsletter while attendance is taken and other administrative items are handled. (seven minutes)

2.     Teacher leads a discussion to answer the following questions:  how does the information on the newsletter add anything to the class’ concern over foreign trade?  Does the information support or undermine the effects of foreign trade?  How?  Overall, should the nation encourage or discourage foreign trade?  What other information might be helpful in answering this last question? (twenty minutes)

3.     Teacher initiates a conceptualizing activity.  He/she instructs students to write across the bottom of a sheet of paper or two the verbal symbols of five concepts.  On the top of the page(s) they write the term “foreign trade” five times so that they line up with the five “bottom” concepts.  The concepts are:  comparative advantage, productivity, balance of trade/payments, trade deficit, and intellectual property.  The teacher then tells students that they are to, for extra credit, think of ideas that logically connect the concept at the bottom of the page with that of the top.  The aim is to provide those ideas that make the logical connection by a succession of ideas.[5]  This might take the format of a competition in which students can suggest ideas in the various chains and, if accepted, the contributing student earns a point.  The student with the most points can receive extra credit in the next unit test.  This is time sensitive with the teacher limiting the time allowed for students to suggest ideas.  (eighteen minutes)

4.     Teacher ends activity and, if not completed, instructs students to finish the exercise before the next class meeting.  If finished, teacher, from the information shared in the activity, offers a quick definition for each concept. (five minutes)

That ends lesson three of this unit of study.  If successful, this lesson arms students with not only a conceptual map of what the unit is addressing, but also a language by which to consider the real-life issues with which many families are dealing.  The included concepts and facts looked at in this lesson also points out that this is a highly nuanced area of concern – there are no simple answers to what foreign trade represents in the American economy.

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[1] See posting, “Is Globalization Inevitable,” September 8, 2017.  This definition, while technically correct, does not give a sense of its importance.  This previous posting gives an explanatory example – the doctor and the typist – that illustrates how comparative advantage leads to some counter intuitive realities.

[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 .  To assist students, this following information can be shared with them as they prepare the newsletter:  The chief features of Bretton Woods 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.

[4] Office of the U. S. Trade Representative, “Benefits of Trade,” accessed September 11, 2017, https://ustr.gov/about-us/benefits-trade .

[5] It is assumed here that if this were a real civics class engaging in its last unit, students would have already done this type of lesson earlier in the course.  At that time, the teacher would give more extensive directions including an example of what is being asked.  Such an example could be a top concept, sovereignty, and a bottom concept, community.  A possible chain of ideas connecting the two could be as follows:  community-political demands-unmet demands-organizing-petitioning for independence-taking arms-fighting (supra political entity)-capitulation (of supra political entity)-sovereignty.  This can be currently illustrated by what might happen in Spain with their “rebelling” province, Catalonia.  It should be pointed out, this example is a time sequenced chain, such chains need not be the basis for such a progression; they only need to be logical.