This post relates to the following Keystone Economic Principles:
1. We all make choices.
2. There ain’t no such thing as a free lunch.
3. All choices have consequences.
4. Economic systems influence choices.
5. Incentives produce “predictable” responses.
6. Do what you do best; trade for the rest.
and
9. Prices are determined by the market forces of supply and demand…and are constantly changing.
Many of you may not be aware of an excellent on-line resource, The Globalist. I look at it regularly and regularly I am rewarded with information I can use.
This week, they have produced a series of pieces, placing trade with China in a historical context. The stories, found here, here, and here, start with the 19th century attempts to open China to trade, the Opium wars, and subsequent treatment of China by the West.
For those of you teaching economics, current events, and world history this is some excellent background. And The Globalist is a resource you might well want to bookmark.
I look forward to your comments.
Friday, February 27, 2009
Wednesday, February 25, 2009
"Tragedy of the Commons" or Market Failure?
This post relates to the following Keystone Economic Principles:
4. Economic systems influence choices.
and
5. Incentives produce “predictable” responses.
On Monday evening, I spent a little time discussing the "tragedy of the commons" with my class. We've also spent time some time talking about proper pricing in the market place. My question for them, and one that you can pose to your students, is "Does this story represent a simple market failure due to improper pricing, or is it an example of the tragedy of the commons - property owned by everyone is generally taken care of by no one?
You can make prima facie cases both ways. It's a market pricing failure because the property is owned by a private firm. The use was just not properly priced. It's a commons issue because the price was subsidized by the government (owned by everyone), and there was no subsequent incentive for proper use.
I know what my thoughts are. Please share your thoughts and those of your students. I will do likewise once I've gotten their responses.
***UPDATE***
There's a free lesson plan and another story related to this one on today's Izzit.
4. Economic systems influence choices.
and
5. Incentives produce “predictable” responses.
On Monday evening, I spent a little time discussing the "tragedy of the commons" with my class. We've also spent time some time talking about proper pricing in the market place. My question for them, and one that you can pose to your students, is "Does this story represent a simple market failure due to improper pricing, or is it an example of the tragedy of the commons - property owned by everyone is generally taken care of by no one?
You can make prima facie cases both ways. It's a market pricing failure because the property is owned by a private firm. The use was just not properly priced. It's a commons issue because the price was subsidized by the government (owned by everyone), and there was no subsequent incentive for proper use.
I know what my thoughts are. Please share your thoughts and those of your students. I will do likewise once I've gotten their responses.
***UPDATE***
There's a free lesson plan and another story related to this one on today's Izzit.
Monday, February 23, 2009
Economics on the Beach
This post relates to the following Keystone Economic Principles:
4. Economic systems influence choices.
and
5. Incentives produce “predictable” responses.
Lately, my wife and I have been looking at movies that have been remade - the most recent being On the Beach. As is our pattern, we start with the original film - done in 1959 in this case. We follow up with the remake - done in 2000 as a made for TV movie.
For those of you unfamiliar with the movie, here's a brief set-up. In both cases, the film is set in post-WWIII Australia. The war has devastated most of the planet north of the equator, and the residual fallout is slowly drifting southward. A lone U.S. nuclear submarine pulls into port in Melbourne, Australia. After submitting to the command of the Australian navy, the sub is sent on a mission to investigate the northern hemisphere searching for signs of life, or at least decreasing radiation. There are other, personal stories involved and I don't want to give away the ending.
After watching the two films and talking with my wife, I found myself thinking about some economic concepts. My wife had mentioned after the first film that the people of Australia didn't seem particularly panicked or even upset about the approaching radiation. In the 1959 version, the people of Australia seem resigned to an unpleasant fate. They remain civil, sometimes comically so, and even friendly to the Americans.
The second film is very different. Australian society is on the verge of collapse. People are panicking and looting is a regular occurrence. The Americans are not welcome, and the people of Australia are often belligerent.
After watching both, I was struck by the difference in the portrayal of a post-apocalyptic society. I wondered to what extent the difference was the result the institutions in place at the time the film was made.
The first version was made in the midst of the Cold War. The second was made at the dawn of the 21st century. In the first, we had been told and we believed or wanted to believe that a nuclear exchange would not necessarily return civilization to the dark ages. The latter version comes after the collapse of the Iron Curtain and a protracted discussion of nuclear winter. It views human nature as having a little less dignity in the face of possible extermination. There is a sense of a reversion to the basic and the animal within us. In the 1960s, we viewed our military with a less jaded eye than we frequently do today. (See the difference in how Gregory Peck and Armand Assante portray the U.S. submarine captain.) Perhaps the difference is that between naiveté and cynicism.
The institutions (in this case informal beliefs and values) played a role in how Australia and the members of the submarine crew are shown. And these incentives (at least as depicted in the films) produced a different set of incentives as shown by characters' reactions and choices within the context of these fictional events.
I would not recommend showing these to your students. The opportunity cost of spending the time is too high. But for those of you looking for an interesting "film study" on a cold, rainy weekend - this could prove thought-provoking. It was for me.
I look forward to your comments, if any.
4. Economic systems influence choices.
and
5. Incentives produce “predictable” responses.
Lately, my wife and I have been looking at movies that have been remade - the most recent being On the Beach. As is our pattern, we start with the original film - done in 1959 in this case. We follow up with the remake - done in 2000 as a made for TV movie.
For those of you unfamiliar with the movie, here's a brief set-up. In both cases, the film is set in post-WWIII Australia. The war has devastated most of the planet north of the equator, and the residual fallout is slowly drifting southward. A lone U.S. nuclear submarine pulls into port in Melbourne, Australia. After submitting to the command of the Australian navy, the sub is sent on a mission to investigate the northern hemisphere searching for signs of life, or at least decreasing radiation. There are other, personal stories involved and I don't want to give away the ending.
After watching the two films and talking with my wife, I found myself thinking about some economic concepts. My wife had mentioned after the first film that the people of Australia didn't seem particularly panicked or even upset about the approaching radiation. In the 1959 version, the people of Australia seem resigned to an unpleasant fate. They remain civil, sometimes comically so, and even friendly to the Americans.
The second film is very different. Australian society is on the verge of collapse. People are panicking and looting is a regular occurrence. The Americans are not welcome, and the people of Australia are often belligerent.
After watching both, I was struck by the difference in the portrayal of a post-apocalyptic society. I wondered to what extent the difference was the result the institutions in place at the time the film was made.
The first version was made in the midst of the Cold War. The second was made at the dawn of the 21st century. In the first, we had been told and we believed or wanted to believe that a nuclear exchange would not necessarily return civilization to the dark ages. The latter version comes after the collapse of the Iron Curtain and a protracted discussion of nuclear winter. It views human nature as having a little less dignity in the face of possible extermination. There is a sense of a reversion to the basic and the animal within us. In the 1960s, we viewed our military with a less jaded eye than we frequently do today. (See the difference in how Gregory Peck and Armand Assante portray the U.S. submarine captain.) Perhaps the difference is that between naiveté and cynicism.
The institutions (in this case informal beliefs and values) played a role in how Australia and the members of the submarine crew are shown. And these incentives (at least as depicted in the films) produced a different set of incentives as shown by characters' reactions and choices within the context of these fictional events.
I would not recommend showing these to your students. The opportunity cost of spending the time is too high. But for those of you looking for an interesting "film study" on a cold, rainy weekend - this could prove thought-provoking. It was for me.
I look forward to your comments, if any.
Friday, February 20, 2009
Which Way on the Trade Road?
This post relates to the following Keystone Economic Principles:
2. There ain’t no such thing as a free lunch.
4. Economic systems influence choices.
6. Do what you do best; trade for the rest.
and
8. Quantity and quality of available resources impact living standards.
There are many roads one can venture down if you use the current economy as a starting point. That’s part of what makes this an interesting time to be an economics teacher.
One of these roads is named "international trade." And it one can travel in one direction and discuss globalization and free trade, or one can travel the other direction and discuss tariffs, protectionism and "buy American" sentiment. Either way gives you the opportunity to introduce topics of comparative advantage, growth and development, and markets and prices - to teach the fundamental ideas of economics.
There are a number of recent resources that one can use to map out your journey. This is my attempt to bring a few of them together for your consideration.
The first (chronologically) is a piece by regular contributer to The New York Times, and the most recent winner of the Nobel Prize for Economics, Paul Krugman. In it, he discusses the circumstances (current) that would be appropriate for introducing protective trade legislation, specifically "buy American." He also points out that it is a "second best approach," but also puts opines that the best approach - coordinated action to increase economic activity including trade - may not be feasible. In short, buy American is not a free lunch. But it may have lower opportunity cost than the preferred "lunch." It may be the best route available to policy-makers. I think there are other institutions that may be weighting the decision-making process of those policy-makers. And while Krugman notes there are externalities to a more open trade policy at this point in time - I'm not convinced that there aren't other, more serious externalities to managed trade.
The second resource is from last Sunday's edition of the CBS weekly news magazine, 60 Minutes, and dealt with the "buy American" clause in the stimulus package. The arguments put forth by a steel company executive interviewed in the piece are interesting. They should provide ample opportunity for discussion and debate. But other executives are interviewed as well and their points are worth noting. Certainly, "buy American" could have an impact on their products and their customers, both here and abroad. And while the steel company exec dismisses the idea of a trade war with an assertion that "they (China) need us as much as we need them," his charge of dumping lacks credibility if we are to believe that the cost of other countries' steel is half the cost of U.S. steel. Again, there's no such thing as free lunch. To portray barriers as having no cost may be viewed by some as naive or self-serving. Or it may be somewhere in between. But one principle remains. The quantity and quality of available resources affects living standards. If we pay more for something, that means we must give something else up. The question may be "what is it?"
Another economist and Nobel Prize winner, Joseph Stiglitz, presents a more cautionary view. He notes that many of the countries of the world have long had to compete with a U.S. that provides numerous subsidies, barriers, and guarantees. The most salient point in Stiglitz's piece comes in the form of a question at the end. "America led the world in globalization. With American-style capitalism and America's financial markets in disrepute, will America now lead the world into a new era of protectionism, as it did once before, during the Great Depression?" One certainly hopes not.
And that brings us to the final item. It is an op-ed piece from today's issue of The Wall Street Journal. The title, "Protectionism Doesn't Pay", would at first seem to be an expected line delivered by a stereotypical member that paper's subscriber-base. But it's not. It is a well-written and well-reasoned essay from Chen Deming, the Minister of Commerce of the People's Republic of China. He uses data and history to great effect. And while some would dismiss this on the basis of "his country stands to lose." I counter with why would that make opposing views more credible? Don't those on the other side of the argument have something to lose?
These last two pieces remind us that "economic systems influence choices", and "do what you do best and trade for the rest." If we choose a system that provides choice and allows resources to flow more efficiently, that can have benefits. Are there costs? Yes. But the costs are the same as those that are imposed when you stop at one gas station while passing others by; or shopping for groceries at one store and bypassing others.
Regardless of where your students align on the topic, these resources will provide you with something to consider before or during discussion. I look forward to your comments.
2. There ain’t no such thing as a free lunch.
4. Economic systems influence choices.
6. Do what you do best; trade for the rest.
and
8. Quantity and quality of available resources impact living standards.
There are many roads one can venture down if you use the current economy as a starting point. That’s part of what makes this an interesting time to be an economics teacher.
One of these roads is named "international trade." And it one can travel in one direction and discuss globalization and free trade, or one can travel the other direction and discuss tariffs, protectionism and "buy American" sentiment. Either way gives you the opportunity to introduce topics of comparative advantage, growth and development, and markets and prices - to teach the fundamental ideas of economics.
There are a number of recent resources that one can use to map out your journey. This is my attempt to bring a few of them together for your consideration.
The first (chronologically) is a piece by regular contributer to The New York Times, and the most recent winner of the Nobel Prize for Economics, Paul Krugman. In it, he discusses the circumstances (current) that would be appropriate for introducing protective trade legislation, specifically "buy American." He also points out that it is a "second best approach," but also puts opines that the best approach - coordinated action to increase economic activity including trade - may not be feasible. In short, buy American is not a free lunch. But it may have lower opportunity cost than the preferred "lunch." It may be the best route available to policy-makers. I think there are other institutions that may be weighting the decision-making process of those policy-makers. And while Krugman notes there are externalities to a more open trade policy at this point in time - I'm not convinced that there aren't other, more serious externalities to managed trade.
The second resource is from last Sunday's edition of the CBS weekly news magazine, 60 Minutes, and dealt with the "buy American" clause in the stimulus package. The arguments put forth by a steel company executive interviewed in the piece are interesting. They should provide ample opportunity for discussion and debate. But other executives are interviewed as well and their points are worth noting. Certainly, "buy American" could have an impact on their products and their customers, both here and abroad. And while the steel company exec dismisses the idea of a trade war with an assertion that "they (China) need us as much as we need them," his charge of dumping lacks credibility if we are to believe that the cost of other countries' steel is half the cost of U.S. steel. Again, there's no such thing as free lunch. To portray barriers as having no cost may be viewed by some as naive or self-serving. Or it may be somewhere in between. But one principle remains. The quantity and quality of available resources affects living standards. If we pay more for something, that means we must give something else up. The question may be "what is it?"
Another economist and Nobel Prize winner, Joseph Stiglitz, presents a more cautionary view. He notes that many of the countries of the world have long had to compete with a U.S. that provides numerous subsidies, barriers, and guarantees. The most salient point in Stiglitz's piece comes in the form of a question at the end. "America led the world in globalization. With American-style capitalism and America's financial markets in disrepute, will America now lead the world into a new era of protectionism, as it did once before, during the Great Depression?" One certainly hopes not.
And that brings us to the final item. It is an op-ed piece from today's issue of The Wall Street Journal. The title, "Protectionism Doesn't Pay", would at first seem to be an expected line delivered by a stereotypical member that paper's subscriber-base. But it's not. It is a well-written and well-reasoned essay from Chen Deming, the Minister of Commerce of the People's Republic of China. He uses data and history to great effect. And while some would dismiss this on the basis of "his country stands to lose." I counter with why would that make opposing views more credible? Don't those on the other side of the argument have something to lose?
These last two pieces remind us that "economic systems influence choices", and "do what you do best and trade for the rest." If we choose a system that provides choice and allows resources to flow more efficiently, that can have benefits. Are there costs? Yes. But the costs are the same as those that are imposed when you stop at one gas station while passing others by; or shopping for groceries at one store and bypassing others.
Regardless of where your students align on the topic, these resources will provide you with something to consider before or during discussion. I look forward to your comments.
Wednesday, February 18, 2009
The Recession and Geography
This post relates to the following Keystone Economic Principle:
4. Economic systems influence choices.
Recently, a few of you have been forwarding a link to a specific story to me. I welcome this. But when I receive several emails from people I respect greatly, all with the same link, I take notice. What starts on my "to read" pile gets moved to the top.
This is such an article. Appearing the March 2009 issue of The Atlantic, Richard Florida's piece on the impact of the current economy on our geography is interesting and thought-provoking. Florida does not contend that our physical geography will change. Rather he's looking at how we organize ourselves within our physical space. He's thinking about how our changing economic fortunes may affect how we live and where we live and intereact. One of the unifying themes of geography is movement, and economics has always provided motive for that.
The piece is reminiscent of much of the work of Jane Jacobs, indeed he cites her in the article. Jacobs saw the cities as unique engines of economic growth - not because of specialization, but rather because the juxtaposition of so many different activities allowed for the exchange of ideas to generate innovation.
I found much of the article compelling. Indeed, Florida's forecast about the demise or reshaping of many mid-size cities makes sense. At the same time, I can't help escape a sense of déjà-vu. Some of the predictions, like a shift from home-ownership to renting or a resizing of our major cities, are familiar. I am reminded history doesn't so much repeat as it rhymes. This may an example. In the late 1970s, there were numerous warnings that the economy of that time would lead to falling living standards (our children will not be as well off as we are), and we would shift to renting. Yet, over the ensuing three decades, things did not go that way. We accumulated more things, and homeownership rose to previously unheard of levels. Did we go too far? Perhaps. But that does not necessarily mean that the pendulum must swing all the way back. (I think that maybe the pendulum is the wrong image to use. To Florida's credit, he does not use it.)
But the most significant point of the article comes in the closing paragraph. The author quotes the economist Paul Romer by saying "A crisis is a terrible thing to waste." Crises have a way of reshaping - not just the economic geography but the psyche. And as I've pointed out in past posts, those internal experiences and beliefs help shape our choices. I sense that Florida is hopeful. I agree.
This is a longer article, but worth your time. Please share your thoughts.
4. Economic systems influence choices.
Recently, a few of you have been forwarding a link to a specific story to me. I welcome this. But when I receive several emails from people I respect greatly, all with the same link, I take notice. What starts on my "to read" pile gets moved to the top.
This is such an article. Appearing the March 2009 issue of The Atlantic, Richard Florida's piece on the impact of the current economy on our geography is interesting and thought-provoking. Florida does not contend that our physical geography will change. Rather he's looking at how we organize ourselves within our physical space. He's thinking about how our changing economic fortunes may affect how we live and where we live and intereact. One of the unifying themes of geography is movement, and economics has always provided motive for that.
The piece is reminiscent of much of the work of Jane Jacobs, indeed he cites her in the article. Jacobs saw the cities as unique engines of economic growth - not because of specialization, but rather because the juxtaposition of so many different activities allowed for the exchange of ideas to generate innovation.
I found much of the article compelling. Indeed, Florida's forecast about the demise or reshaping of many mid-size cities makes sense. At the same time, I can't help escape a sense of déjà-vu. Some of the predictions, like a shift from home-ownership to renting or a resizing of our major cities, are familiar. I am reminded history doesn't so much repeat as it rhymes. This may an example. In the late 1970s, there were numerous warnings that the economy of that time would lead to falling living standards (our children will not be as well off as we are), and we would shift to renting. Yet, over the ensuing three decades, things did not go that way. We accumulated more things, and homeownership rose to previously unheard of levels. Did we go too far? Perhaps. But that does not necessarily mean that the pendulum must swing all the way back. (I think that maybe the pendulum is the wrong image to use. To Florida's credit, he does not use it.)
But the most significant point of the article comes in the closing paragraph. The author quotes the economist Paul Romer by saying "A crisis is a terrible thing to waste." Crises have a way of reshaping - not just the economic geography but the psyche. And as I've pointed out in past posts, those internal experiences and beliefs help shape our choices. I sense that Florida is hopeful. I agree.
This is a longer article, but worth your time. Please share your thoughts.
Friday, February 13, 2009
On Monetary Policy and Theory
This post relates to the following Keystone Economic Principles:
1. We all make choices.
3. All choices have consequences.
4. Economic systems influence choices.
and
9. Prices are determined by the market forces of supply and demand…and are constantly changing.
With the recent focus on fiscal policy stimulus, there's been renewed interest in John Maynard Keynes, the British economist who penned The General Theory of Employment, Interest and Money. But we've also been more cognizant of the role of central banks and the Federal Reserve in particular. And because of this, I'd like to draw your attention to a number of resources that may be of use to you and your students when you approach the topic central banks and monetary policy. I particularly recommend it if you are a school that participates in an economic competition such as The Fed Challenge.
The first resource is an EconTalk podcast with host Russ Roberts and Tyler Cowen, one of Robert's colleagues at George Mason University. Last spring, Russ and Tyler did a program on monetary policy. It was interesting and informative. And it provided a good solid explanation of the function of monetary policy in the economy. At a couple points, Cowen clarifies some misconceptions that plague many adults. And he also explains some of the limits of monetary policy, particularly in the current environment.
The second resource is this article from The Economist about Irving Fisher. (HT to Greg Mankiw.) Fisher was a contemporary of Keynes and was probably the best-known American economist at the time. And while he was brilliant (he first put down the formula that provides the name for this blog), he is unfortunately usually only remembered for stating that the stock market had reached "a permanently high plateau" - in October, 1929. But Keynes noted that much of what he learned about interest rates and integrated into his work he owed to Fisher. I'll put that down as high praise.
Finally, if the article about Irving Fisher moves you to learn more, one of his paperss about a Debt-Deflation Theory of Great Depressions is on-line, thanks to the folks at the Federal Reserve Bank of St. Louis. While I wouldn't offer this to most students, some of your better ones may find it interesting. It's relatively short (21 pages) and doesn't contain a lot of mathematics.
Now I know many of you may have other things to do this weekend. That's okay. I suspect most of you aren't up to monetary policy in your class yet, anyway. But file this stuff away. I think it could be useful.
As always, I look forward to your thoughts on the matter.
1. We all make choices.
3. All choices have consequences.
4. Economic systems influence choices.
and
9. Prices are determined by the market forces of supply and demand…and are constantly changing.
With the recent focus on fiscal policy stimulus, there's been renewed interest in John Maynard Keynes, the British economist who penned The General Theory of Employment, Interest and Money. But we've also been more cognizant of the role of central banks and the Federal Reserve in particular. And because of this, I'd like to draw your attention to a number of resources that may be of use to you and your students when you approach the topic central banks and monetary policy. I particularly recommend it if you are a school that participates in an economic competition such as The Fed Challenge.
The first resource is an EconTalk podcast with host Russ Roberts and Tyler Cowen, one of Robert's colleagues at George Mason University. Last spring, Russ and Tyler did a program on monetary policy. It was interesting and informative. And it provided a good solid explanation of the function of monetary policy in the economy. At a couple points, Cowen clarifies some misconceptions that plague many adults. And he also explains some of the limits of monetary policy, particularly in the current environment.
The second resource is this article from The Economist about Irving Fisher. (HT to Greg Mankiw.) Fisher was a contemporary of Keynes and was probably the best-known American economist at the time. And while he was brilliant (he first put down the formula that provides the name for this blog), he is unfortunately usually only remembered for stating that the stock market had reached "a permanently high plateau" - in October, 1929. But Keynes noted that much of what he learned about interest rates and integrated into his work he owed to Fisher. I'll put that down as high praise.
Finally, if the article about Irving Fisher moves you to learn more, one of his paperss about a Debt-Deflation Theory of Great Depressions is on-line, thanks to the folks at the Federal Reserve Bank of St. Louis. While I wouldn't offer this to most students, some of your better ones may find it interesting. It's relatively short (21 pages) and doesn't contain a lot of mathematics.
Now I know many of you may have other things to do this weekend. That's okay. I suspect most of you aren't up to monetary policy in your class yet, anyway. But file this stuff away. I think it could be useful.
As always, I look forward to your thoughts on the matter.
Thursday, February 12, 2009
Alternative Stimulus Plan
This post relates to the following Keystone Economic Principles:
1. We all make choices.
2. There ain’t no such thing as a free lunch.
3. All choices have consequences.
and
4. Economic systems influence choices.
You can file this as "water under the bridge" but it's still an interesting mind exercise. There is an interesting video (HT to Cafe Hayek) that could generate a lot of class discussion. I suspect the video was meant as a slam of the stimulus package. But like so many short, sound-bites on the news, it doesn't go far enough.
It was done by an economics student at George Mason University. And I've heard other variations on the same theme - remove taxes for a period of time. In this case it's the payroll tax ("Who is this guy, FICA, and why is he taking my money?") I've also heard it proposed for Federal income tax withholding, but the concept is sound - who can do a better job deciding what to do with the money - bureaucrats or consumers?
But there are a lot of additional questions that occurred to me as I watched the video: To what extent would people save/spend the extra amount in their paycheck (marginal propensity to consume)? What impact would cancelling the payroll tax have on the viability of other programs (Social Security / Medicare)? Is a payroll tax cut fair (directly helps only those currently employed)? What is the value of the multiplier for a tax cut of this kind?
What are some other questions the video raises for you and your students? I welcome your comments and their reactions.
***UPDATE***
My guess is that the idea floated in the video wouldn't have this problem.
1. We all make choices.
2. There ain’t no such thing as a free lunch.
3. All choices have consequences.
and
4. Economic systems influence choices.
You can file this as "water under the bridge" but it's still an interesting mind exercise. There is an interesting video (HT to Cafe Hayek) that could generate a lot of class discussion. I suspect the video was meant as a slam of the stimulus package. But like so many short, sound-bites on the news, it doesn't go far enough.
It was done by an economics student at George Mason University. And I've heard other variations on the same theme - remove taxes for a period of time. In this case it's the payroll tax ("Who is this guy, FICA, and why is he taking my money?") I've also heard it proposed for Federal income tax withholding, but the concept is sound - who can do a better job deciding what to do with the money - bureaucrats or consumers?
But there are a lot of additional questions that occurred to me as I watched the video: To what extent would people save/spend the extra amount in their paycheck (marginal propensity to consume)? What impact would cancelling the payroll tax have on the viability of other programs (Social Security / Medicare)? Is a payroll tax cut fair (directly helps only those currently employed)? What is the value of the multiplier for a tax cut of this kind?
What are some other questions the video raises for you and your students? I welcome your comments and their reactions.
***UPDATE***
My guess is that the idea floated in the video wouldn't have this problem.
Wednesday, February 11, 2009
Globalization and the Current Recession
This post relates to the following Powell Center Keystone Economic Concepts:
1. We all make choices.
2. There ain’t no such thing as a free lunch.
4. Economic systems influence choices.
6. Do what you do best; trade for the rest.
and
9. Prices are determined by the market forces of supply and demand…and are constantly changing.
The concept of interdependence has value both at the micro and the macro level. And when the discussion turns to the development of less developed economies, trade can cut both ways. While it's obvious that the current recession is taking a toll around the world, it always helps to have a couple of articles that help clarify the idea.
There are a couple articles that fit this description from The Wall Street Journal. The first chronicles the impact of the slowdown on emerging markets. This is particularly notable because many of the less developed economies around the world have been experiencing notable improvements. As they have embraced trade, they have prospered.
The second article makes note of the impact of falling commodity prices on various Latin American economies. (It also contains some images and an interactive graphic.) Falling demand in industrial and industrializing economies has led to a precipitous fall in prices and exports. This is impacting government, business and personal finances.
The articles are important for a few reasons. The first and easiest is to draw the connections between economies in a global marketplace. The second, is to make students aware that foreign trade is not the problem. Indeed, the backlash against trade is a more significant problem for our future recovery. Changing trade rules would affect not only our ability to choose, but the ability of others. Consequently, it is important that the U.S. not retreat from its commitment to globalization and free trade. That issue is covered in this article from The Economist.
The third reason is to develop students with a true understanding of the dynamics of a global economy. Other people suffer in crisis. But crisis has a way of making people withdraw and focus on themselves. Adam Smith noted that we are often more sympathetic to the problems of a few near to us, than we are to millions suffering other parts of the world. The way to alleviate world problems is not to withdraw from the world, but to maintain a larger view.
If you see other economic concepts or lessons to be drawn from these articles, please share them. Your comments are always welcome.
1. We all make choices.
2. There ain’t no such thing as a free lunch.
4. Economic systems influence choices.
6. Do what you do best; trade for the rest.
and
9. Prices are determined by the market forces of supply and demand…and are constantly changing.
The concept of interdependence has value both at the micro and the macro level. And when the discussion turns to the development of less developed economies, trade can cut both ways. While it's obvious that the current recession is taking a toll around the world, it always helps to have a couple of articles that help clarify the idea.
There are a couple articles that fit this description from The Wall Street Journal. The first chronicles the impact of the slowdown on emerging markets. This is particularly notable because many of the less developed economies around the world have been experiencing notable improvements. As they have embraced trade, they have prospered.
The second article makes note of the impact of falling commodity prices on various Latin American economies. (It also contains some images and an interactive graphic.) Falling demand in industrial and industrializing economies has led to a precipitous fall in prices and exports. This is impacting government, business and personal finances.
The articles are important for a few reasons. The first and easiest is to draw the connections between economies in a global marketplace. The second, is to make students aware that foreign trade is not the problem. Indeed, the backlash against trade is a more significant problem for our future recovery. Changing trade rules would affect not only our ability to choose, but the ability of others. Consequently, it is important that the U.S. not retreat from its commitment to globalization and free trade. That issue is covered in this article from The Economist.
The third reason is to develop students with a true understanding of the dynamics of a global economy. Other people suffer in crisis. But crisis has a way of making people withdraw and focus on themselves. Adam Smith noted that we are often more sympathetic to the problems of a few near to us, than we are to millions suffering other parts of the world. The way to alleviate world problems is not to withdraw from the world, but to maintain a larger view.
If you see other economic concepts or lessons to be drawn from these articles, please share them. Your comments are always welcome.
Tuesday, February 10, 2009
Externalities of a Brunch
This post relates to the following Keystone Economic Principles:
1. We all make choices.
2. There ain’t no such thing as a free lunch.
4. Economic systems influence choices.
and
8. Quantity and quality of available resources impact living standards.
Yesterday, my students and I discussed externalities as we examined problems with pricing. This morning, there was an excellent story in The Wall Street Journal that provides a great jumping-off point for further discussion. (There is also a slide show, and a related video.) Evidently, there is a temple in Berkeley that serves a wonderful Sunday brunch. Unfortunately, the neighbors are beginning to complain that the smells, the crowd, and the litter are imposing costs on them despite the fact that they are not part of the transaction. The temple maintains they are not selling the food. They accept donations by providing tokens for cash. And the tokens can be exchanged for brunch. Furthermore, the temple maintains this is a religious observance and that the activity is thus protected under law. (Both the laws protecting religion, and the zoning ordinances pertaining to the temple are examples of "institutions", the rules that are established within a system."
The details in the story are interesting. The question for your students is “how would they ascribe costs to the parties receiving the benefits?”
Please share your students' comments if you use this in class.
1. We all make choices.
2. There ain’t no such thing as a free lunch.
4. Economic systems influence choices.
and
8. Quantity and quality of available resources impact living standards.
Yesterday, my students and I discussed externalities as we examined problems with pricing. This morning, there was an excellent story in The Wall Street Journal that provides a great jumping-off point for further discussion. (There is also a slide show, and a related video.) Evidently, there is a temple in Berkeley that serves a wonderful Sunday brunch. Unfortunately, the neighbors are beginning to complain that the smells, the crowd, and the litter are imposing costs on them despite the fact that they are not part of the transaction. The temple maintains they are not selling the food. They accept donations by providing tokens for cash. And the tokens can be exchanged for brunch. Furthermore, the temple maintains this is a religious observance and that the activity is thus protected under law. (Both the laws protecting religion, and the zoning ordinances pertaining to the temple are examples of "institutions", the rules that are established within a system."
The details in the story are interesting. The question for your students is “how would they ascribe costs to the parties receiving the benefits?”
Please share your students' comments if you use this in class.
Graphic of the Stimulus Package
This post relates to the following Keystone Economic Principles:
1. We all make choices.
2. There ain’t no such thing as a free lunch.
3. All choices have consequences.
and
4. Economic systems influence choices.
Many of you probably already saw the subject of this post, and it is now a bit dated. Nevertheless I think it's a valuable resource as your classes discuss the stimulus package out of Washington. I hadn't been able to find the link, but thanks to Mark Perry for providing digging deeper.
Last week's Washington Post had this graphic that broke down the various components of the package as it then existed. While there have been some changes, and further changes may yet happen, I think it offers your students an interesting visual representation of the breadth and depth of the proposal, as well as enough detail to provoke discussion.
At the very least, it provides a platform to discuss the potential consequences of the package (positive and negative), as well as how the package changes the "rules", the institutions in our system that shape our choices.
I hope you find it useful.
***UPDATE***
A couple more items to use in your classroom discussion.
This first is a table showing the differences between the House and Senate versions of the package.
The second is another graphic that breaks down how the compromise package is divided among tax cuts, spending, and aid programs. It also lists some examples in each category.
1. We all make choices.
2. There ain’t no such thing as a free lunch.
3. All choices have consequences.
and
4. Economic systems influence choices.
Many of you probably already saw the subject of this post, and it is now a bit dated. Nevertheless I think it's a valuable resource as your classes discuss the stimulus package out of Washington. I hadn't been able to find the link, but thanks to Mark Perry for providing digging deeper.
Last week's Washington Post had this graphic that broke down the various components of the package as it then existed. While there have been some changes, and further changes may yet happen, I think it offers your students an interesting visual representation of the breadth and depth of the proposal, as well as enough detail to provoke discussion.
At the very least, it provides a platform to discuss the potential consequences of the package (positive and negative), as well as how the package changes the "rules", the institutions in our system that shape our choices.
I hope you find it useful.
***UPDATE***
A couple more items to use in your classroom discussion.
This first is a table showing the differences between the House and Senate versions of the package.
The second is another graphic that breaks down how the compromise package is divided among tax cuts, spending, and aid programs. It also lists some examples in each category.
Capital and Economic Development
This post relates to the following Keystone Economic Principles:
8. Quantity and quality of available resources impact living standards.
and
9. Prices are determined by the market forces of supply and demand…and are constantly changing.
A couple years ago, I posted on an interesting story (free content at this writing) about fishermen in India who were improving their business thanks to the arrival of cell phones. Yesterday's issue of The Wall Street Journal had a similar story about farmers in India benefitting from the arrival of cell phones.
We teach about productive resources: land, labor, capital and entrepreneurship. But we frequently forget how what seems to be a small (to us) addition of capital can significantly alter productivity and raise standards of living.
By adding cell phones to the mix in rural India, farmers get better access to more information that allows them to make better production decisions. Information about weather and prices in more distant markets provide a more efficient allocation of resources and better prices.
In addition to using this as an example of the addition of capital to the production process, you may also consider using it when you discuss economic development in the macro portion of your class.
I look forward to your comments.
8. Quantity and quality of available resources impact living standards.
and
9. Prices are determined by the market forces of supply and demand…and are constantly changing.
A couple years ago, I posted on an interesting story (free content at this writing) about fishermen in India who were improving their business thanks to the arrival of cell phones. Yesterday's issue of The Wall Street Journal had a similar story about farmers in India benefitting from the arrival of cell phones.
We teach about productive resources: land, labor, capital and entrepreneurship. But we frequently forget how what seems to be a small (to us) addition of capital can significantly alter productivity and raise standards of living.
By adding cell phones to the mix in rural India, farmers get better access to more information that allows them to make better production decisions. Information about weather and prices in more distant markets provide a more efficient allocation of resources and better prices.
In addition to using this as an example of the addition of capital to the production process, you may also consider using it when you discuss economic development in the macro portion of your class.
I look forward to your comments.
John Maynard Keynes and Personal Finance
This post relates to the following Keystone Economic Principles:
1. We all make choices.
3. All choices have consequences.
7. Economic thinking is marginal thinking.
and
8. Quantity and quality of available resources impact living standards.
You might wonder how one could possibly link personal finance and decision-making with the man who many consider the greatest economist of the 20th century. (I have some thoughts on that, but that may be the subject of another post.)
The fact is, in Chapter 9 of The General Theory of Employment, Interest and Money - the same book that is at the core of many debates about what the government should do to alleviate the recession - Keynes lays out a simple list of motives that individuals have to save or spend. Now, Keynes being Keynes did not label them as such, but "a rose by any other name" is still a rose. These motives can be the basis for a discussion when teaching basic budgeting and can provide an opportunity to study what we should be doing with our finances, not just now but at any time.
Let's look at these and discuss them from a standpoint of potential for classroom activity. I've retained Keynes' original wording with my comments in parenthesis.
Motives to Refrain from Spending (Save)
Precaution - To build up a reserve against an unforeseen contingency.
(This is the emergency fund that most financial planners suggest.)
Foresight - To provide for an anticipated future relation between the income and the needs of the individual and his family different from that which exists at present...for old age, family education, or the maintenance of dependents.
(Clearly this is the basic saving for retirement, college, future support of children with special needs or elderly parents.)
Calculation - To enjoy interest and appreciation, because a larger real consumption at a later date is preferred to a smaller consumption.
(This may be seen as saving for a specific event - vacation, holidays, or wedding.)
Improvement - To enjoy a gradually increasing expenditure, since it gratifies a common instinct to look forward to a gradually improving standard of life rather than the contrary...
(One may think of this as providing for additional income above and beyond what is earned on the job.)
Independence - To enjoy a sense of independence and the power to do things, though without a clear idea or definite intention of specific action.
(Keynes is probably suggesting providing resources for opportunities that may arise so that we aren't forced to forgo opportunities for lack of funds, or to avoid debt.)
Enterprise - To secure a "mass de maneuver" (some financial advisors might refer to this as "critical mass", but it may represent the initial equity) to carry out speculative or business projects. (The funds that form the basis of major decision - starting a business, etc.)
Pride - To bequeath a fortune.
(What if you want to "leave something to the children?”
Avarice - To satisfy pure miserliness, unreasonable but insistent inhibitions against acts of expenditure...
(Calling Mr. Scrooge...)
Oddly enough, Keynes provided no explanations for these categories. Presumably, he felt they were self-explanatory.
Motives to Consumption (Spend)
Enjoyment
(Things that provide us pleasure. Given the rest of the list, I presume Keynes would put spending for basic necessities in this category.)
Shortsightedness
(We might consider this the category for "impulse spending.")
Generosity
(This clearly is where our charitable giving would fall.)
Miscalculation
(We often make decisions that seem well thought out, but we often don't anticipate everything.)
Ostentation
Extravagance
(Personally, I'm not sure what the difference between these last two represented to Keynes.
The dictionary defines both as an unnecessary or showy display. It's possible that the first would mean a simple, visible display and the second would be more "vulgar." It's also possible that ostentation refers to a continuous state, whereas extravagance might refer to a single event - perhaps a celebration of some kind.)
Granted that I'm trying to delve into the mind of a long-dead great economist (especially regarding the spending categories). Nevertheless, these categories can provide a basis of discussion in a personal finance course. We are used to categorizing spending by "wants" & "needs". Keynes’s categories may be helpful in subdividing further. But they also can be helpful in analyzing past spending.
Furthermore, the categories for saving can provide students with a basis for goal-setting: are they longer term? Are they shorter term?
What do you think? Would these categories be helpful and useful in your classroom? I look forward to your comments.
1. We all make choices.
3. All choices have consequences.
7. Economic thinking is marginal thinking.
and
8. Quantity and quality of available resources impact living standards.
You might wonder how one could possibly link personal finance and decision-making with the man who many consider the greatest economist of the 20th century. (I have some thoughts on that, but that may be the subject of another post.)
The fact is, in Chapter 9 of The General Theory of Employment, Interest and Money - the same book that is at the core of many debates about what the government should do to alleviate the recession - Keynes lays out a simple list of motives that individuals have to save or spend. Now, Keynes being Keynes did not label them as such, but "a rose by any other name" is still a rose. These motives can be the basis for a discussion when teaching basic budgeting and can provide an opportunity to study what we should be doing with our finances, not just now but at any time.
Let's look at these and discuss them from a standpoint of potential for classroom activity. I've retained Keynes' original wording with my comments in parenthesis.
Motives to Refrain from Spending (Save)
Precaution - To build up a reserve against an unforeseen contingency.
(This is the emergency fund that most financial planners suggest.)
Foresight - To provide for an anticipated future relation between the income and the needs of the individual and his family different from that which exists at present...for old age, family education, or the maintenance of dependents.
(Clearly this is the basic saving for retirement, college, future support of children with special needs or elderly parents.)
Calculation - To enjoy interest and appreciation, because a larger real consumption at a later date is preferred to a smaller consumption.
(This may be seen as saving for a specific event - vacation, holidays, or wedding.)
Improvement - To enjoy a gradually increasing expenditure, since it gratifies a common instinct to look forward to a gradually improving standard of life rather than the contrary...
(One may think of this as providing for additional income above and beyond what is earned on the job.)
Independence - To enjoy a sense of independence and the power to do things, though without a clear idea or definite intention of specific action.
(Keynes is probably suggesting providing resources for opportunities that may arise so that we aren't forced to forgo opportunities for lack of funds, or to avoid debt.)
Enterprise - To secure a "mass de maneuver" (some financial advisors might refer to this as "critical mass", but it may represent the initial equity) to carry out speculative or business projects. (The funds that form the basis of major decision - starting a business, etc.)
Pride - To bequeath a fortune.
(What if you want to "leave something to the children?”
Avarice - To satisfy pure miserliness, unreasonable but insistent inhibitions against acts of expenditure...
(Calling Mr. Scrooge...)
Oddly enough, Keynes provided no explanations for these categories. Presumably, he felt they were self-explanatory.
Motives to Consumption (Spend)
Enjoyment
(Things that provide us pleasure. Given the rest of the list, I presume Keynes would put spending for basic necessities in this category.)
Shortsightedness
(We might consider this the category for "impulse spending.")
Generosity
(This clearly is where our charitable giving would fall.)
Miscalculation
(We often make decisions that seem well thought out, but we often don't anticipate everything.)
Ostentation
Extravagance
(Personally, I'm not sure what the difference between these last two represented to Keynes.
The dictionary defines both as an unnecessary or showy display. It's possible that the first would mean a simple, visible display and the second would be more "vulgar." It's also possible that ostentation refers to a continuous state, whereas extravagance might refer to a single event - perhaps a celebration of some kind.)
Granted that I'm trying to delve into the mind of a long-dead great economist (especially regarding the spending categories). Nevertheless, these categories can provide a basis of discussion in a personal finance course. We are used to categorizing spending by "wants" & "needs". Keynes’s categories may be helpful in subdividing further. But they also can be helpful in analyzing past spending.
Furthermore, the categories for saving can provide students with a basis for goal-setting: are they longer term? Are they shorter term?
What do you think? Would these categories be helpful and useful in your classroom? I look forward to your comments.
Sunday, February 8, 2009
Observations on the Current Economy
This post connects to two Keystone Economic Principles:
3. All choices have consequences.
and
4. Economic systems influence choices.
One aspect of the current recession has been the effort to compare it to past downturns. In that process, authors frequently focus on what is similar between this event and one or more past events.
Jerry Muller has an interesting insight in a recent post on The American website. Muller suggests that what may be most important is what is different about each major recession, rather than what is similar. For the current situation, he notes the differences in financial markets and financial institutions, and notes widely divergent contributing factors - innovation, regulation, incentives, and rating.
What I found most intriguing and at the same time obvious, was the idea that looking for similarities between events lends itself prescribing similar solutions. But the solutions need to be unique - based more in the culture and (in economic terms) the institutions inherent in the culture. The impetus for such solutions can come from government and the private sector.
And while both may be able to provide solutions that generate some level of confidence, something that is sorely needed at this time; my previous reading about economic institutions would indicate that for real change to take place, the economy will need to take time to evolve.
I'd be interested in your thoughts about the article.
3. All choices have consequences.
and
4. Economic systems influence choices.
One aspect of the current recession has been the effort to compare it to past downturns. In that process, authors frequently focus on what is similar between this event and one or more past events.
Jerry Muller has an interesting insight in a recent post on The American website. Muller suggests that what may be most important is what is different about each major recession, rather than what is similar. For the current situation, he notes the differences in financial markets and financial institutions, and notes widely divergent contributing factors - innovation, regulation, incentives, and rating.
What I found most intriguing and at the same time obvious, was the idea that looking for similarities between events lends itself prescribing similar solutions. But the solutions need to be unique - based more in the culture and (in economic terms) the institutions inherent in the culture. The impetus for such solutions can come from government and the private sector.
And while both may be able to provide solutions that generate some level of confidence, something that is sorely needed at this time; my previous reading about economic institutions would indicate that for real change to take place, the economy will need to take time to evolve.
I'd be interested in your thoughts about the article.
What I've Been Reading
This post connects to the following Keystone Economic Principles:
1. We all make choices.
3. All choices have consequences.
8. Quantity and quality of available resources impact living standards.
and
9. Prices are determined by the market forces of supply and demand…and are constantly changing.
I seem to be stuck on books so here's something for the high school. I recently finished The Price of Everything: A Parable of Possibility and Prosperity by Russell Roberts.
If you're a visitor to the EconTalk website, you know the author, a professor of economics at George Mason University. But you may not know that Russ also uses fiction to illustrate economic principles to very good effect.
In this relatively new book, the main characters are a tennis athlete on scholarship at Stanford and the provost and economics professor at that school. They come together in the aftermath of an earthquake, largely as a result of a large chain store's pricing policies immediately following the event.
The story provides a rich setting to explain the spontaneous order provided by market pricing. It also demonstrates how price is set by competition, while also spurring innovation. The messages of price (what to produce, how much, and for whom) are handled well as the two main characters meet in a variety of situations.
I'm not proposing that the book be part of the Western Canon, but it is a different, and in some cases more amusing, way of examining the power of market pricing. If you’re looking for a lighter approach to the concept, this could be useful. At the very least it is a welcome tool to help illustrate some of the basics of microeconomics.
I look forward to your comments.
***UPDATE***
And courtesy of Reason magazine, here's a real-life parallel to Russ's book. Side-step a lot of the political rhetoric, and you've got a ready-made discussion for class about entrepreneurship, innovation, and price. Did uncoordinated activity achieve what coordinated activity could not?
1. We all make choices.
3. All choices have consequences.
8. Quantity and quality of available resources impact living standards.
and
9. Prices are determined by the market forces of supply and demand…and are constantly changing.
I seem to be stuck on books so here's something for the high school. I recently finished The Price of Everything: A Parable of Possibility and Prosperity by Russell Roberts.
If you're a visitor to the EconTalk website, you know the author, a professor of economics at George Mason University. But you may not know that Russ also uses fiction to illustrate economic principles to very good effect.
In this relatively new book, the main characters are a tennis athlete on scholarship at Stanford and the provost and economics professor at that school. They come together in the aftermath of an earthquake, largely as a result of a large chain store's pricing policies immediately following the event.
The story provides a rich setting to explain the spontaneous order provided by market pricing. It also demonstrates how price is set by competition, while also spurring innovation. The messages of price (what to produce, how much, and for whom) are handled well as the two main characters meet in a variety of situations.
I'm not proposing that the book be part of the Western Canon, but it is a different, and in some cases more amusing, way of examining the power of market pricing. If you’re looking for a lighter approach to the concept, this could be useful. At the very least it is a welcome tool to help illustrate some of the basics of microeconomics.
I look forward to your comments.
***UPDATE***
And courtesy of Reason magazine, here's a real-life parallel to Russ's book. Side-step a lot of the political rhetoric, and you've got a ready-made discussion for class about entrepreneurship, innovation, and price. Did uncoordinated activity achieve what coordinated activity could not?
Tuesday, February 3, 2009
Parallel Track: Modern Times?
This post references the following Keystone Economic Principles:
1. We all make choices.
2. There ain’t no such thing as a free lunch.
3. All choices have consequences.
and
7. Economic thinking is marginal thinking.
Recently, there was an interesting article in The Wall Street Journal that chronicled the choices made by a Texas family dealing with the current state of the economy. What made it particularly valuable as a classroom resource was how the piece linked the decisions faced by the family to the various businesses they use, and the firms being affected by the choices made by this family, and by others in similar circumstances. The story is a clear example of interdependence in the economy – how our choices affect others and how others choices affect us.
What on the surface seem to be small decisions on the margin of a family budget have a much larger impact in the broader economy, when multiplied. Consequently, the story makes a great connection between personal finance and the larger economy. And the graphic at the end of the story is extremely helpful in showing how interdependence works in the modern economy.
As always, your comments are welcome.
1. We all make choices.
2. There ain’t no such thing as a free lunch.
3. All choices have consequences.
and
7. Economic thinking is marginal thinking.
Recently, there was an interesting article in The Wall Street Journal that chronicled the choices made by a Texas family dealing with the current state of the economy. What made it particularly valuable as a classroom resource was how the piece linked the decisions faced by the family to the various businesses they use, and the firms being affected by the choices made by this family, and by others in similar circumstances. The story is a clear example of interdependence in the economy – how our choices affect others and how others choices affect us.
What on the surface seem to be small decisions on the margin of a family budget have a much larger impact in the broader economy, when multiplied. Consequently, the story makes a great connection between personal finance and the larger economy. And the graphic at the end of the story is extremely helpful in showing how interdependence works in the modern economy.
As always, your comments are welcome.
Books for Economics in the Elementary Grades: Out of the Dust
This post references the following Keystone Economic Principles:
1. We all make choices.
3. All choices have consequences.
4. Economic systems influence choices.
and
8. Quantity and quality of available resources impact living standards.
I recently ran across another interesting book for use in the middle school.
Out of the Dust is the story of a young girl growing up in Oklahoma during the Dust Bowl years of the Great Depression. Instead of the normal narrative, the book is a series of free verse poems. It chronicles the hard times faced by the girl and her parents as they cope with bad weather and bad economy.
It is full of references to prices, decisions made by her farmer father, and references to Depression era programs enacted under the Roosevelt administration. There are references to the family's living conditions on their small farm that speak to how the quality of life can be impacted by unlikely resources, or the lack thereof. Many of the other examples provide clear examples of how the economic system and institutions (rules) affect decisions made by people during the period. Other examples illustrate the consequences of decisions, from the happy to the tragic. The girl's life is forever changed by the experience, but it provides a poignant setting for examining the choices people make when faced by adversity.
If you've used this book, I'd appreciate any comments you have.
1. We all make choices.
3. All choices have consequences.
4. Economic systems influence choices.
and
8. Quantity and quality of available resources impact living standards.
I recently ran across another interesting book for use in the middle school.
Out of the Dust is the story of a young girl growing up in Oklahoma during the Dust Bowl years of the Great Depression. Instead of the normal narrative, the book is a series of free verse poems. It chronicles the hard times faced by the girl and her parents as they cope with bad weather and bad economy.
It is full of references to prices, decisions made by her farmer father, and references to Depression era programs enacted under the Roosevelt administration. There are references to the family's living conditions on their small farm that speak to how the quality of life can be impacted by unlikely resources, or the lack thereof. Many of the other examples provide clear examples of how the economic system and institutions (rules) affect decisions made by people during the period. Other examples illustrate the consequences of decisions, from the happy to the tragic. The girl's life is forever changed by the experience, but it provides a poignant setting for examining the choices people make when faced by adversity.
If you've used this book, I'd appreciate any comments you have.
Books for Economics in the Elementary Grades: Out of the Dust
This post references the following Keystone Economic Principles:
1. We all make choices.
3. All choices have consequences.
4. Economic systems influence choices.
and
8. Quantity and quality of available resources impact living standards.
The book in this post wasn't part of the lunchtime program; rather it's something I'm reading as part of a couple upcoming workshops in Richmond and Harrisonburg, VA later this month.
Out of the Dust is the story of a young girl growing up in Oklahoma during the Dust Bowl years of the Great Depression. Instead of the normal narrative, the book is a series of free verse poems. It chronicles the hard times and hard choices faced by the girl and her parents as they cope with bad weather and bad economy.
It is full of references to prices, decisions made by her farmer father, and Depression era programs enacted under the Roosevelt administration. There are references to the family's living conditions on the small farm they own that illustrate how the quality of life can be impacted by unlikely resources, or the lack thereof. Many of the other examples provide clear examples of how the economic system and institutions (rules) affect decisions made by people during the period. Still other examples illustrate the consequences of decisions, from the happy to the tragic. The girl's life is forever changed by the growing up when and where she did; but it provides a poignant setting for examining the choices people make when faced by adversity.
If you've used this book, I'd appreciate any comments you have.
1. We all make choices.
3. All choices have consequences.
4. Economic systems influence choices.
and
8. Quantity and quality of available resources impact living standards.
The book in this post wasn't part of the lunchtime program; rather it's something I'm reading as part of a couple upcoming workshops in Richmond and Harrisonburg, VA later this month.
Out of the Dust is the story of a young girl growing up in Oklahoma during the Dust Bowl years of the Great Depression. Instead of the normal narrative, the book is a series of free verse poems. It chronicles the hard times and hard choices faced by the girl and her parents as they cope with bad weather and bad economy.
It is full of references to prices, decisions made by her farmer father, and Depression era programs enacted under the Roosevelt administration. There are references to the family's living conditions on the small farm they own that illustrate how the quality of life can be impacted by unlikely resources, or the lack thereof. Many of the other examples provide clear examples of how the economic system and institutions (rules) affect decisions made by people during the period. Still other examples illustrate the consequences of decisions, from the happy to the tragic. The girl's life is forever changed by the growing up when and where she did; but it provides a poignant setting for examining the choices people make when faced by adversity.
If you've used this book, I'd appreciate any comments you have.
Monday, February 2, 2009
Books for Economics in the Elementary Grades: Have Wheels Will Travel
This post refers to material that relate to the following Keystone Economic Principles:
1. We all make choices.
2. There ain’t no such thing as a free lunch.
3. All choices have consequences.
and
5. Incentives produce “predictable” responses.
Another one of the books I've been examining for the Lower School here at Collegiate is Have Wheels Will Travel. The book is part of a series called "The Amazing Days of Abby Hayes." And while I have no idea what the other books in the series are like, this one is a gem if you want to integrate financial and economic literacy into the fourth or fifth grade classroom.
The basic story has Abby desperately seeking funds to purchase a new set of roller blades. She is the second youngest child, but the youngest daughter. As such, she endures her older sisters' hand-me-downs. But the blades she's received don't fit well, and they don't have purple wheels.
Throughout the book, Abby keeps a running tally on her available funds, what she needs to purchase the new roller blades, and a detailed description of each job she undertakes and each decision she makes with her earned funds. She learns the value of work and of her savings, but more importantly, she learns that her choices have consequences - some more "expensive" than others.
Regardless, the new roller blades motivate her to press on to the inevitable and happy conclusion. Despite being predictable, the story is engaging.
If you've used this book, I'd be interested in your comments.
1. We all make choices.
2. There ain’t no such thing as a free lunch.
3. All choices have consequences.
and
5. Incentives produce “predictable” responses.
Another one of the books I've been examining for the Lower School here at Collegiate is Have Wheels Will Travel. The book is part of a series called "The Amazing Days of Abby Hayes." And while I have no idea what the other books in the series are like, this one is a gem if you want to integrate financial and economic literacy into the fourth or fifth grade classroom.
The basic story has Abby desperately seeking funds to purchase a new set of roller blades. She is the second youngest child, but the youngest daughter. As such, she endures her older sisters' hand-me-downs. But the blades she's received don't fit well, and they don't have purple wheels.
Throughout the book, Abby keeps a running tally on her available funds, what she needs to purchase the new roller blades, and a detailed description of each job she undertakes and each decision she makes with her earned funds. She learns the value of work and of her savings, but more importantly, she learns that her choices have consequences - some more "expensive" than others.
Regardless, the new roller blades motivate her to press on to the inevitable and happy conclusion. Despite being predictable, the story is engaging.
If you've used this book, I'd be interested in your comments.
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