Donald Trump ran his presidential election campaign on the promise to bring back auto, steel and coal-mining jobs to the rust belt regions of the United States. There is only a slim chance of this happening.
According to this article, most of the jobs that have been lost in these regions are less a function of the negative effects of free trade, and more to do with the effects of technology, automation, a shift in economic focus, and better or cheaper alternatives.
Appropriate Subject Area(s):
Key Questions to Explore:
- What factors led to the job losses in the rust belt regions of the United States?
- What steps can Mr. Trump take to increase employment in the rust belt regions of the United States? Hint: implement economic policies similar to those of Pittsburgh and some southern states.
- What effects will Mr. Trump’s protectionist policies have on the United States?
- What effects will Mr. Trump’s protectionist policies have on the United States’ trading partners?
- Why are renewable energy subsidies important?
Protectionist policies, fracking, rust-belt , subsidies
Protectionist policies: this refers to government policies that restrict or restrain international trade, often done by utilizing quotas and tariffs with the intent of protecting local businesses and jobs from foreign competition.
- Fracking: proper term — hydraulic fracturing. This is the process of drilling down into the earth before a high-pressure water mixture is directed at the rock to release the gas inside. Fracking uses huge amounts of water, which must be transported to the fracking site, at significant environmental cost. Environmentalists say the chemicals used may escape and contaminate groundwater around the fracking site.
- Rust belt regions of the United States: the belt covers a section of the northeast U.S., running from the east of the state of New York, through Pennsylvania, Ohio and Michigan, then ending in north Indiana and east Illinois and Wisconsin. The rust belt areas, which once experienced economic booms, now suffer from economic decline, population loss and urban decay.
- Subsidies: a subsidy is a benefit given by the government to businesses or individuals, usually in the form of a cash payment or a tax reduction. The subsidy is typically given to increase the ability of such companies to produce their goods and services.
A copy of the article
Introduction to lesson and task:
Donald Trump’s victory in the United States’ election was largely due to winning key battleground states in the rust belt region. His message was compelling to his supporters, who took him seriously. Perhaps the main reason his message resonated with so many voters was that he promised to bring back jobs to the United States.
In this article, Konrad Yakabuski takes a detailed look at this promise and concludes that Mr. Trump’s promise is unlikely to succeed for the following reasons:
- Manufacturing jobs: these are unlikely to return because for every manufacturing job lost to trade in recent years, eight have been lost to automation. It follows that automation has cost the U.S. more manufacturing jobs than free trade. Therefore, curbing free trade will only bring back a few jobs, if any, and it will cost the U.S. jobs in export-competitive sectors, due to retaliatory policies other nations will be compelled to take.
- If Mr. Trump decides to impose tariffs on Mexican and Chinese goods and services, his actions will hurt American consumers, as prices of these goods will increase significantly. This action also risks disrupting American companies’ supply chains. If Mr. Trump decides to take this course of action, it might hurt the United States and the rest of the world.
- Steel: there is currently an excess supply of steel in the global market. As a result, cities like Pittsburgh have shifted their focus to health care and the production of lucrative technology.
- Coal: the reduction in the price of natural gas and the increase in production of renewable energy – both substitutes for coal in energy production – have reduced the demand for coal.
The above reasons will make it difficult for Mr. Trump to live up to his promise of bring back auto, steel and coal-mining jobs.
A more feasible plan to increase employment might involve the following:
- Increase investment in training and retraining programs to increase the quality of labour capital available to employers.
- Provide incentives like tax breaks and subsidies to lure and keep big corporations in the United states.
- Increase investment in sectors where the United States has a comparative advantage, like technology, agriculture, etc.
- Increase spending on infrastructure.
Action (lesson plan and task):
Hand your students a copy of the article.
- Ask your students to state the main reasons rust belt regions in the United States have suffered job losses
- Ask your students to suggests steps these regions can take to increase gainful employment opportunities for their residents.
- Ask students to state the negative effects of protectionist policies.
- Tell your students that some Republican governors in southern states reduced unemployment by cutting taxes.
- Ask them why would this attract business and jobs to their states.
- Ask your students to state some of the negative effects of cutting taxes on a government’s ability to function effectively.
- Tell your students that Pittsburgh has effectively transitioned from relying on steel production to producing technology and health-care jobs.
- Ask your students to state some reasons why other cities in rust belt regions have been unable to effectively make the transition from manufacturing jobs to other sectors.
- Tell your students that coal production is down by 10%.
- Ask your students to state the economic reasons for the reduction in the production of coal.
- Ask them to state the environmental benefit of the reduction of coal production. (reduction of air pollution, acid rain, wildfires and greenhouse gas emissions.)
- The United States currently provides renewable energy subsidies, in form of tax breaks, to companies producing renewable energy.
- Why is this important?
- What is the importance of subsidies?
Consolidation of Learning:
- Ask students to suggest some actions that governments could take to help individuals who lose their jobs due to automation.
- By the end of this lesson plan students should have a better understanding of the impact globalization and automation have had on employment.
- Ask students to explain why Mr. Trump is unlikely to bring back jobs to rust belt regions.