International Economic Crises and the United States

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May 11, 2010

Max Fraad Wolff, economics professor in the New School University Graduate Program in International Affairs, wrote in a recent Huffington Post blog that the problems facing the United States’ economy are structural, not cyclical.  He contends that future state subsidies and deficit spending will not be possible, and that balancing the budget will require more savings and higher taxes.  From the article:

We find ourselves in a unique historical moment in which coping mechanisms for structural economic problems are proving inadequate. The great looming political and economic fights in the US and EU will be over who pays and who benefits as imbalances are slowly and painfully reduced.

This article is useful for teachers in two ways:  1) it provides thought provoking facts and hypotheses about the global economy, and 2) it demonstrates the power of tone in expressing a point of view.

Students should be encouraged to read this article two times, paying attention to a different aspect of the article with each reading.  After students’ first reading, they should respond to the following quote from the article:  “It is also worthy of note that our Federal Government borrows more than the Greek national debt every 6 months these days.”  Given the current crisis in the Greek economy, what does this statement imply about the future of the United States?  Is this a fair comparison to make?  In what ways are the economies of the United States and Greece similar?  In what ways are they dissimilar?

Following this discussion, students should read the article a second time, paying explicit attention to the author’s tone in the article.  The teacher should begin discussion by asking students about the author’s purpose in writing this article.  Was it to inform, entertain, encourage action, or something else entirely?  How did the students feel after reading the article?  Hopeful?  Cautious?  Scared?  Were these feelings a result of specific language used by the author?  Why or why not?

What imagery is the author provoking with the following quote:

The terrifying and exciting basic fact of today is that the structural underpinnings of the world economy have shifted. The plates under the globalization of the post 1970s oil crises are heaving and buckling…. It is a strange irony that we have seen so much in the way of earthquake and eruption in the natural world too.

Are the changes in the global economy analogous to an earthquake?  Why or why not?  Given the recent natural disasters and the resultant loss of life around the world, are these comparisons appropriate?  Could the results of a global economic crisis be similar to those of a natural disaster?  Is it irresponsible to compare economic crises (which are human-made), with natural disasters?  What does this imply about our abilities to avoid economic crises?  Are those implications accurate?  Why or why not?

These questions have no simple answers and students will need time to think about and reflect upon their opinions.  This discussion should occur over several class periods, and students should be given time to both discuss their thoughts with their classmates and write about their opinions individually.  As students work through these ideas, they will develop critical thinking skills and begin to formulate their own opinions about the global economy and the future in which they want to live.

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  1. Understanding Fiscal Responsibility » Blog Archive » Assessing the Danger of National Debt :

    […] States.  The last Understanding Fiscal Responsibility blog touched on this idea in examining comparisons between international economic crises and the US economy.  Over the past few days, these comparisons have received even more attention as economists debate […]

  2. Understanding Fiscal Responsibility » Blog Archive » Comparisons between the United States and Greece :

    […] Previous Understanding Fiscal Responsibility blogs have examined comparisons between the United States’ financial situation and that of Greece.  Teachers could use this article, along with those previously discussed on this blog, to help students better understand the similarities and differences between the two economies.  Students should be encouraged to critically examine these comparisons and talk about what these discussions add to and/or detract from our fiscal discourse. […]

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