Lesson Topic: Specialization & Exchange
Recently our department decided that the introductory microeconomics course would cover the topic rather than the macroeconomics course. So, while we all had taught the topic at one point in time, there was no standard way of approaching the topic, nor were there specific goals developed for students to learn from the topic. Furthermore, the topic is very timely as it covers issues related to international trade and outsourcing.
What complicates the issue, however, is that traditionally, economists teach the issue of trade as though it is unequivocally a good thing. While most economists will agree with this statement, when the general public considers free trade and all of the outsourcing ugliness, they think that it is associated with mainly negative outcomes. This is the tension we are attempting to disentangle. Our goal is to present the issue of free trade in all of its complexity, with the hope of not only getting students to analyze a complicated issue with multiple perspectives, but also to recognize that while trade may have some adjustment costs in the short run, that it is beneficial in the long run.
The lesson will be divided into two parts:
- Part I: Gains from Trade
- Part II: Winners and Losers: Trade in the short run as well as government intervention in the free trade process.
We discussed the two potential entries into the microeconomics course of the discussion on trade. The first is the production possibilities curve where we can discuss specialization and the division of labor and how, for example it relates to economic growth, or consumption beyond a single country’s (or entity’s) available resources. This also leads to a discussion about self-sufficiency.
Keith uses this opportunity in his course to discuss why, for example Wisconsin produces cheese/corn (whatever) as opposed to, for example Florida producing oranges.
The second entry point is a discussion about demand and supply, but taken to an international level where prices are different with and without trade. This is an interesting entry point because you can get into the way in which governments restrict trade with tariffs, leading to a discussion of winners and losers from trade.
We realized in our discussion, however, that this experiment mainly focuses on the consumption side of trade and would be difficult to motivate any real negative response to the issue. We felt that “real world” issues involving trade (such as outsourcing and the loss of local jobs), is much more messy and complicated. Students would surely understand the big idea from the experiment, but lose the theory when faced with a ‘real’ story such as their dad or neighbor losing his job.
We also had an insight from the discussion that students might understand trade very differently if they think about trade as between states or as between countries. This led to a discussion about how to get students to think about trade in a more ‘real’ way. What will trigger them to drop the theory that they seem to really get, and react on a more personal level?
We decided to supplement that lesson with a more complicated case study on the steel industry in order to get at the deeper issues of free trade.
Learning Goals
At a basic level our goal is to have students understand the mechanics of specialization and trade. They need to understand the gains from trade. At a higher level, our goal is to have students be able to disentangle the complexities of real world trade including all of the costs of adjustments as well as the benefits.
Overarching Purposes
- To have students analyze the multiple sides of a complex issue
- To have students gain the ability to incorporate what they learn in class with what they see in real life
Contact: Lisa Giddings
Previous Log: Step 1
When we repeated our lesson, our goals didn’t change as much as we tried to make our lesson emphasize them better, and our assessment piece measure them better.
Learning goals:
1) Understand the mechanics of specialization and trade.
2) Identify the costs and benefits of international trade
3) Emphasize the ability to analyze multiple sides of a complex issue.
4) Develop the ability to reconcile what students learn in class about free trade with “real life situations.”
Posted by: Betsy Knowles | May 19, 2005 at 08:10 AM