Trade Applications: Addressing the Decline of Manufacturing and the Challenge of Climate Change Through Trade Policy

Alan Green, Stetson University,
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Summary

Policy choices on two major trends are presented to student teams: the decline in manufacturing employment in the U.S. and the challenge of global climate change. Both are considered through the lens of trade policy, which is used as an application of supply/demand analysis.

Context for Use

This activity was designed for principles courses but could also be adapted for international trade classes. It will take 50-75 minutes. The activity starts with a readiness-assessment quiz, which is followed by two policy application exercises.

Overview

This activity is a team-based policy debate. The learning goal is for students to apply economic models and analysis to support their arguments on relevant policy issues. They are first given the long term trend of declining employment in manufacturing in the U.S. and asked to respond to it in terms of trade policy (the description notes that globalization has contributed to the decline but is not the only cause). The options range from protectionist measures (requiring products to be made in the U.S.A. for example) to compensating the losers from trade directly or through working training programs. The second question notes the challenge of climate change and innocently points out that most trade agreements do little in terms of environmental regulation. Students are then asked to consider if trade policy should address environmental concerns such as climate change. Each application exercise has policy questions with five specific options. The topics are chosen and options are designed so that there is not an intended correct answer. Rather, students should be able to make an argument for any of the choices. Their task as a team is to discuss the issue and come to some consensus for the team choice. They are instructed to vote if they cannot come to consensus. The team discussion takes the first 15-20 minutes of the activity.
The instructor then facilitates a class discussion, which begins by having teams simultaneously reveal their choices (using large cards with letters). The teams are then called on in turn to defend their choices to the rest of the class. Their presentations should refer to economic models and arguments covered in class. They should acknowledge the benefits of specialization and the gains from trade, for instance, even if arguing for protection for manufacturing workers. This begins a class wide discussion on what the best policy should be. The instructor facilitates this discussion for 10-15 minutes, after which it culminates in class vote. Students vote individually for the class vote, but extra credit can be offered for any team whose choice wins a majority of the class vote (thus incentivizing effective argument and persuasion).

Expected Student Learning Outcomes

In this activity students will use economic models of international trade (in a basic supply/demand framework) along with historical trends and evidence to support arguments for policies to address long term challenges of declining manufacturing employment and global climate change.

Information Given to Students

Student teams are given folders with both the quiz and application exercises.


Quiz - basics of trade (Microsoft Word 2007 (.docx) 17kB May14 18)
Application Exercises - Trade (Microsoft Word 2007 (.docx) 65kB May14 18)

Teaching Notes and Tips

This activity includes both a readiness-assessment quiz and application exercises. It can be completed in one class period or spread over two. The quiz is ten multiple choice questions on background material that has been previously covered in both readings and class lectures or activities. This material includes international trade in the supply/demand framework as well as the common arguments against globalization and their counterarguments. The quiz is posted online for individual completion before class and then given to each team to take again in class along with immediate feedback scratch cards.

In the application exercise students are given two policy questions in teams. Their task as a team is to try to form a consensus around one of the five options for each policy. The policy questions are designed so that there is no "right" answer; the goal is for students to see how economics can inform policy debates. For the manufacturing question, for instance, students should be expected to acknowledge the costs imposed by the protectionist options. If they opt for compensating workers harmed by trade they are expected to propose a means to fund it. Similarly, when discussing global climate change students should be cognizant of the different willingness and ability to pay of poor and rich countries for carbon reduction. The overall goal is for students to engage in important debates informed by economic models.

The instructor should circulate, listen to arguments and ask probing questions to get students to think critically. Teams sometimes settle on a choice fairly quickly; in that case the instructor should challenge their arguments by arguing for other options and asking the team if everyone is in agreement. Once all teams have made their choices they should all report them simultaneously. This can be easily done by giving each team large letters (A through E) and having them all hold up the letter of their choice at the same time. The instructor should select one member from each team to briefly defend that team's choice to the class (random selection is good here; it is better if students do not know who is presenting until it is time to present so everyone has to prepare and be engaged in the discussion).

The instructor then leads a short class discussion on the topic, filling in or correcting flawed reasoning when necessary and also noting if there is a convergence to one or two options. If the class comes to a consensus that losers from trade should be compensated, for instance, a fruitful discussion can be had on why that has not typically occurred. Similarly, if the class agrees that there should be a global carbon market, they should consider how hard it may be to actually implement. it. It is also good to consider why other options were eliminated; were some choices clearly off the table? Why? The discussion culminates in a class-wide individual vote on each policy. Students do not have to choose the same policy from their group for the individual vote; rather than can use it as a vehicle to express their personal preference, especially if it differs from the group. If desired, additional incentives can be offered to any team whose policy choice secures a majority of class votes; a few extra credit points can motivate teams to build consensus and argue strongly for their preferred policy.

Assessment

Quiz grades provide evidence of preparedness and general understanding. Exams using application type questions assess the students' ability to meet the learning goal for this activity.

References and Resources