Monday, October 31, 2005

Economics of Cities

The most recent (Third Quarter, 2005) issue of the Federal Reserve Bank of Philadelphia's Business Review has an interesting article on the Economic Role of Cities in the 21st Century.

The article brought to mind a number of resources that can be recommended to any teacher wishing to tackle the topic in class. I'm not sure how many teachers, particularly in high school, spend a lot of time on the topic; economic growth does offer a good opportunity to integrate other topics such as interdependence, externalities, public and private goods, and the role of government, just to name a few.

The resources that were brought to mind were the following: The Economy of Cities and The Death and Life of Great American Cities both by Jane Jacobs and Nature's Metropolis: Chicago and the Great West by William Cronon. All three should be available through on-line or local bookstores.

The first two are books that grabbed my attention quite a few years ago. The Death and Life of Great American Cities was actually reissued in 1992, while the first title is at least 30 years old. Nevertheless, both were helpful to me in seeing the development of cities in economic terms.

The third book was given to me as a gift a few years ago and I've only recently gotten around to reading it. It is interesting because of the author's ability to weave together economics, history, geography, and environmental science. And because it has an interdisciplinary approach is helpful in providing information as well as anecdotes for the classroom.

Feel free to share any comments on these or other books on the topic, or ideas on their use in the classroom.

Another interesting article on urban economics is in the Federal Reserve Bank of Kansas City's Economic Review for the third quarter of 2005. The article is titled The Shared Fortunes of Cities and Suburbs.

Posted by TSchilling at 4:40 PM Comments (0)

Friday, October 28, 2005

Thinking and Acting on the Margin

I found a recent post on the blog site, The Big Picture (link to specific post no longer active)interesting. It made start to think about the difference between "thinking on the margin" and "acting on the margin." One of the "truisms" was that "seeing an opportunity and acting upon are two different things." This "truism" speaks to the fact that many people may think on the margin and recognize an opportunity to benefit, but not as many people act on the opportunity. I sometimes get to travel with this job, and I think one might construct a way to explain the difference based on airline customers.

Many travelers are experts at the "two bag" limit…or may seem to be. Most people seem intent on stuffing everything into two bags for stowing in "the overhead compartment and under the seat in front of you." Now we can argue what their true motivation is for adopting this behavior. If the motivation is to save time by not having to go to the baggage claim area, then we can proceed with the example. By packing this way to avoid going to baggage claim, one may surmise that they recognize an opportunity to gain a few minutes by skipping the baggage claim process.

But one could argue that those who "act on the margin" in addition to thinking on it, may choose to consider the size of the plane and where they’re sitting. If one were sitting in the back of a large plane (something more than 20 – 25 rows), it may actually be less aggravating and more efficient to check the bag. Given the fact that it seems to take interminably long for the people in the front of the plant to retrieve their bags and exit the plane, one might be able to find one's bag arrives at baggage claim by the time you finally deplane. You could get to the terminal, pick up your bag, and leave…now if only there wasn’t a "lost/damaged baggage" problem to complicate this example.

Your comments?

Posted by TSchilling at 7:34 PM

Friday, October 21, 2005

A Cycle of Adams Letters: Economics in History

I’ve been reading A Cycle of Adams Letters. It is a selection of letters and letter excerpts between Charles Francis Adams, Sr. and his son Henry, who are on diplomatic post in London during the American Civil War, and Charles Francis Adams, Jr., a union cavalry officer back in the states. The senior Adams is the son of President John Quincy and grandson of President John Adams.

For history or economics teachers, the work is interesting in two respects. First, the letters give a sense of “here and now” to the era studied. Second, and more importantly for this blog entry, there are some interesting insights into the economics of the conflict.

The impact of the cotton embargo on the English economy is discussed, and the resulting swings in the value of Confederate bonds floated in European financial markets as the war tides change are a great way to show how events in one economic system can impact others, often with significant results.

Also of interest was the “economic reasoning” exhibited by Charles, Jr. when he talks about the choices he faces as a unit commander in May of 1863. He refers to how horses are used up, rather than rested, and then new horses commandeered, all for the objective of keeping the maximum force in the field, in contact with the enemy. This is an interesting exercise in decision-making, given the context and the objective. And the context and objective help to clarify the concept.

I would note there are some concerns I have about classroom use. Many of the observations, particularly of Charles, Jr., about former slaves and black regiments are peppered with language that is offensive today.

I welcome your comments.

Posted by TSchilling at 4:17 PM

Friday, October 14, 2005

The Idea of Money

I recently overheard two people discussing what appeared to be a budget issue. At one point, one of the discussants said to the other, “You always view things from a money point of view.” While I didn’t hear the retort, the comment got me thinking about teaching about the concept of money.

There seems to be a hue and cry for teaching people to handle their money. But I’m not sure anyone wants to discuss the idea of money. I know there are textbooks that talk about the “characteristics” and “functions” of money, usually within a few pages. But I believe that most of us don’t really discuss money.

I’m inclined to define money functionally, and to try to get students to look at it in a similar way. Specifically, I like to talk about money in a traditional way, as a (1) medium of exchange, (2) store of value, and (3) measure of value. While all the functions can help people gain insights about handling money, the first two can be especially helpful. I think they help illustrate the larger role of money in the economy, and on a personal level.

The function of “medium of exchange” speaks to money as an intermediary, a tool to simplify trade. It allows us to specialize in labor and to interact with others without having to offer labor to every person with which we wish to trade. In short, it is a claim against goods and services of others, based on our labor and how the marketplace “values” that labor. (This can also lead into a discussion of the third function listed, but perhaps I will save that for another post on this site.)

The function of “store of value” is also pertinent. For money allows us to accumulate our expended labor for future claims against goods and services. It allows us to lay claim to goods and services at a point in the future, and even to plan for them. But do people see their finances, or the nation’s for that matter, through these lenses? Do they understand that what money allows us to do is to trade the product of our labor, for that of someone else?

To relate this back to the conversation I overheard, the issue becomes not one of money, but what claims to resources (present and future) do they have or will they have. How can they best allocate those claims? Is it possible to do a better job of helping students understand the personal resource choices (family budgets) and larger resource choices (state and national budgets) they face by helping them understand what money is?

Is there advantage to be gained by discussing money and how it is handled from a functional viewpoint? If we do so, can we help students to more easily identify the opportunity cost inherent in each choice? Will it help them see that doing one thing doesn’t come at the expense of “mere money,” but at the expense of other goods and services, either in the present or the future?

Send me your comments.

Posted by TSchilling at 7:28 PM Comments (1)

Good post and I plan to link to your site.

Posted by: Mike at October 24, 2005 7:29 PM