This is an old joke, but a good one. I just wish I could remember which blog I saw it on so I could give credit. Help me out.
There were three prisoners in a jail cell. They started talking and comparing what they were in for.
The first one said, "I'm a gas station owner and I set my prices above market, so I'm in for price-gouging."
The second one said, "I'm a gas station owner too, and I set my prices below market, so I'm in for predatory pricing."
The third one said, "I'm a gas station owner as well, and I set my prices at market. I'm in for collusion and price-fixing."
Posted by TSchilling at March 3, 2006 8:03 PM
Comments
Let's hope they learned their lessons and change them daily (or hourly) like the local ones, ;-). One has to wonder whether price instability is a sign of efficiency or inefficiency. Note that price-gouging only occurs when prices are high, predatory pricing when they are low, and price fixing when they are level.
Posted by: Lord at March 7, 2006 6:19 PM
Friday, March 3, 2006
Interdependence and Trade
I've been traveling a bit recently. This usually means I spend the first part of my morning back in the office getting caught up on phone calls, e-mails, etc. Once that's done, I find some time to check out the handful of blog sites I try to read regularly.
Don Boudreaux at Cafe Hayek had an interesting post on Jane Jacobs. The post and subsequent comments are interesting in their own right and definitely worth your time. But the post made me think about a different selection. In the same book cited by Boudreaux, Jacobs pulls a quote from Henry Grady, wherein Grady is describing funeral. I was struck by the great example of trade and interdependence this made and how it could be used to highlight those concepts in the classroom. See if you agree.
"The grave was dug through solid marble, but the marble headstone came from Vermont. It was in a pine wilderness but the pine coffin came from Cincinnati. An iron mountain over-shadowed it but the coffin nail and the screws and the shovel came from Pittsburgh. With hard wood and metal abounding, the corpse was hauled on a wagon from South Bend, Indiana. A hickory grove grew near by, but the pick and shovel handles came from New York. The cotton shirt on the dead man came from Cincinnati, the coat and breeches from Chicago, the shoes from Boston; the folded hands were encased in white gloves from New York, and round the poor neck, which had worn all its living days the bondage of lost opportunity, was twisted a cheap cravat from Philadelphia. That country, so rich in undeveloped resources, furnished nothing for the funeral except the corpse and the hole in the ground and would probably have imported both of those if it could have done so. And as the poor fellow was lowered to his rest, on coffin bands from Lowell, he carried nothing into the next world as a reminder of his home in this, save the halted blood in his veins, the chilled marrow in his bones, and the echo of the dull clods that fell on his coffin lid." (From The New South: Writings and Speeches of Henry Grady, Beehive Press, 1971)
Your response is encouraged.
Posted by TSchilling at 10:05 AM | Comments (0)
Don Boudreaux at Cafe Hayek had an interesting post on Jane Jacobs. The post and subsequent comments are interesting in their own right and definitely worth your time. But the post made me think about a different selection. In the same book cited by Boudreaux, Jacobs pulls a quote from Henry Grady, wherein Grady is describing funeral. I was struck by the great example of trade and interdependence this made and how it could be used to highlight those concepts in the classroom. See if you agree.
"The grave was dug through solid marble, but the marble headstone came from Vermont. It was in a pine wilderness but the pine coffin came from Cincinnati. An iron mountain over-shadowed it but the coffin nail and the screws and the shovel came from Pittsburgh. With hard wood and metal abounding, the corpse was hauled on a wagon from South Bend, Indiana. A hickory grove grew near by, but the pick and shovel handles came from New York. The cotton shirt on the dead man came from Cincinnati, the coat and breeches from Chicago, the shoes from Boston; the folded hands were encased in white gloves from New York, and round the poor neck, which had worn all its living days the bondage of lost opportunity, was twisted a cheap cravat from Philadelphia. That country, so rich in undeveloped resources, furnished nothing for the funeral except the corpse and the hole in the ground and would probably have imported both of those if it could have done so. And as the poor fellow was lowered to his rest, on coffin bands from Lowell, he carried nothing into the next world as a reminder of his home in this, save the halted blood in his veins, the chilled marrow in his bones, and the echo of the dull clods that fell on his coffin lid." (From The New South: Writings and Speeches of Henry Grady, Beehive Press, 1971)
Your response is encouraged.
Posted by TSchilling at 10:05 AM | Comments (0)
Wednesday, March 1, 2006
Economics in History, Part II
While the link I'm going to suggest may be a bit much for your students, it is certainly good background if you're teaching trade in economics, or if you teach a course in European or World History that includes the 19th Century.
The Economist is a well-respected periodical. Some people think of it as the British predecessor to U. S. News & World Report. I won't get into whether it is or isn't. Suffice it to say that the British magazine has been around longer and is a good review of news and economic events from outside the U.S.
On the website of The Economist, there is a link that will take you to the text from the Preliminary Number, dated August 5, 1843. The text, while lengthy, provides a contemporary view of English trade, and lays out the case for the magazine. It discusses trade in coffee, sugar, wool and wheat, and the impact of trade barriers on these basic items.
You might well want to take a look. But do so when you have the time to examine it. I think you'll find it useful and interesting in providing background for your classes.
Posted by TSchilling at March 1, 2006 4:40 PM
Comments
The date of the article is, as you note, August 5, 1843. Right below it says it is from the print edition. I am glad The Economist clarified that because I thought it might have been from The Economist's 1843 World Wide Web edition.
Posted by: Tom at March 1, 2006 7:33 PM
The Economist is a well-respected periodical. Some people think of it as the British predecessor to U. S. News & World Report. I won't get into whether it is or isn't. Suffice it to say that the British magazine has been around longer and is a good review of news and economic events from outside the U.S.
On the website of The Economist, there is a link that will take you to the text from the Preliminary Number, dated August 5, 1843. The text, while lengthy, provides a contemporary view of English trade, and lays out the case for the magazine. It discusses trade in coffee, sugar, wool and wheat, and the impact of trade barriers on these basic items.
You might well want to take a look. But do so when you have the time to examine it. I think you'll find it useful and interesting in providing background for your classes.
Posted by TSchilling at March 1, 2006 4:40 PM
Comments
The date of the article is, as you note, August 5, 1843. Right below it says it is from the print edition. I am glad The Economist clarified that because I thought it might have been from The Economist's 1843 World Wide Web edition.
Posted by: Tom at March 1, 2006 7:33 PM
A Little Fiscal Policy
When you're covering fiscal policy in your survey course, nothing seems to generate a lively debate than discussion about "tax fairness." Whether discussing on a theoretical level, or as an adjunct to a "prepare your return exercise," the topic generally will get some reaction. I certainly don't claim to have the answers, but a couple of sources for information to include in your classroom are worth looking at.
First, the United States Treasury Department release of March 2, 2005 has some interesting information. While dated, it does provide some fodder for discussion.
Second, the Tax Foundation released some information back in October of 2005. If you're not familiar with this group, they publish the "Tax Freedom Day" information each year, stating on which day the average American taxpayer "stops working to pay taxes."
Thanks to The Amateur Economist and Curmudgeon blog for pointing these out.
Posted by TSchilling at 4:03 PM | Comments (0)
First, the United States Treasury Department release of March 2, 2005 has some interesting information. While dated, it does provide some fodder for discussion.
Second, the Tax Foundation released some information back in October of 2005. If you're not familiar with this group, they publish the "Tax Freedom Day" information each year, stating on which day the average American taxpayer "stops working to pay taxes."
Thanks to The Amateur Economist and Curmudgeon blog for pointing these out.
Posted by TSchilling at 4:03 PM | Comments (0)
Wednesday, February 22, 2006
Introduction to Economics
One thing I always tried to do with my high school students was to explain to them, early on, what economics was and was not. This was harder to do in my early career, but it was always interesting.
I always found it a challenge to get them to abandon preconceived notions about the subject. Convincing them that economics was not just about dollars, but about a wide range of choices often took some doing. Many times, these notions were based on "what I saw on television, heard on the radio, read in the newspaper." (Yes, my students actually read the paper occasionally in those pre-internet days.)
Discussions such as the one by Russell Roberts on the Cafe Hayek blog would have done much to help students see the wider picture. And the comments submitted would have helped the discussion, I'm sure. I recommend you look at this post before you start your next course. I think it will help your students see where economics can take them intellectually.
Posted by TSchilling at 3:15 PM | Comments (0)
I always found it a challenge to get them to abandon preconceived notions about the subject. Convincing them that economics was not just about dollars, but about a wide range of choices often took some doing. Many times, these notions were based on "what I saw on television, heard on the radio, read in the newspaper." (Yes, my students actually read the paper occasionally in those pre-internet days.)
Discussions such as the one by Russell Roberts on the Cafe Hayek blog would have done much to help students see the wider picture. And the comments submitted would have helped the discussion, I'm sure. I recommend you look at this post before you start your next course. I think it will help your students see where economics can take them intellectually.
Posted by TSchilling at 3:15 PM | Comments (0)
Thursday, February 16, 2006
Productivity and Economic Growth
This post is a stretch, but stay with me. Hopefully you'll see where I'm going.
Yesterday I received a recent copy of the Federal Reserve Bank of Cleveland's Economic Commentary. The article, Are We Engineering Ourselves out of Manufacturing Jobs? was an interesting discussion about productivity and job growth.
However, it got me thinking about an old (1963) science fiction short story by C. M. Kornbluth titled Little Black Bag. (For a synopsis of the story check here.) In that story, future technocrats had developed technology to the point that anyone could "do" anything. The technology held the skill. The little black bag was a doctor's bag that could be operated by anyone, because all the instruments did the diagnosis, the prescribing, even the surgery. This represents one view of a pinnacle in economic growth--an era where even complex professions can be mastered by anyone given the proper technology. Of course, the true decision-making lies with the handful of experts at the top of the futuristic society.
When studying productivity and technology's contribution to economic growth, it might be interesting to use this story as a discussion starter. Has anyone done this, or is anyone even familiar with this story?
Posted by TSchilling at February 16, 2006 7:39 PM
Comments
Not with that one, but there was another where aliens provided a duplicating machine that could duplicate anything including itself in an attempt to destroy the economy. The world changed overnight from one of mass markets to one where only unique innovative design held any value.
Posted by: Lord at February 18, 2006 5:23 PM
Do you remember the title and author of that story? It sounds interesting. Kind of an evil application of replicator technology from Star Trek.
Posted by: Tim at February 21, 2006 4:49 PM
Yesterday I received a recent copy of the Federal Reserve Bank of Cleveland's Economic Commentary. The article, Are We Engineering Ourselves out of Manufacturing Jobs? was an interesting discussion about productivity and job growth.
However, it got me thinking about an old (1963) science fiction short story by C. M. Kornbluth titled Little Black Bag. (For a synopsis of the story check here.) In that story, future technocrats had developed technology to the point that anyone could "do" anything. The technology held the skill. The little black bag was a doctor's bag that could be operated by anyone, because all the instruments did the diagnosis, the prescribing, even the surgery. This represents one view of a pinnacle in economic growth--an era where even complex professions can be mastered by anyone given the proper technology. Of course, the true decision-making lies with the handful of experts at the top of the futuristic society.
When studying productivity and technology's contribution to economic growth, it might be interesting to use this story as a discussion starter. Has anyone done this, or is anyone even familiar with this story?
Posted by TSchilling at February 16, 2006 7:39 PM
Comments
Not with that one, but there was another where aliens provided a duplicating machine that could duplicate anything including itself in an attempt to destroy the economy. The world changed overnight from one of mass markets to one where only unique innovative design held any value.
Posted by: Lord at February 18, 2006 5:23 PM
Do you remember the title and author of that story? It sounds interesting. Kind of an evil application of replicator technology from Star Trek.
Posted by: Tim at February 21, 2006 4:49 PM
Friday, February 10, 2006
Are We Saving Enough?
Way back in my early years at the Federal Reserve Bank of Chicago, I wrote an article for our economic education newsletter that had the same title as does this post. Back when I wrote the article (1993), many economists were concerned about a personal savings rate that hovered between four and five percent. With recent headlines touting numbers that have gone negative, things would appear to be worse than they were a dozen years ago.
My interest was further peaked upon reading the Cleveland Fed's Economic Commentary for December, 2005. One of the charts showed saving as something just under seven percent of GDP. And while accurate, it certainly didn't agree with everything grabbing the headlines in the media.
Now one of the good things about working at the Fed is that there's always an economist around when you need one. I went to one of our research staff and asked for his take on the seemingly contradictory information. The short version of his explanation was in "what's in the data."
Finally, Don Bodreaux at Cafe Hayek discussed essentially the same issue in his February 8 post titled On American's Consumption and Saving. Bodreaux pointed out that many things the average person would consider "investment" gets counted as savings. My colleague pointed out that because Personal Savings is arrived at by subtracting spending from income, it's easily possible to run negative because of things that probably come out of savings (like a down payment on a new car).
But ultimately, the question for educators is "how do we explain this to the students?" The answer is that we have to get them to think about what data does and does not say. The issue of spending beyond income is important--both on a personal and national level. But one has to be careful not to overreact as to the immediacy, nor to underplay the importance of savings in providing capital for future investment. There's one side of the issue, and there's the other. There are no simple answers.
(Maybe there's a reason President Truman wished for a one-armed economist.)
Your comments are welcome.
Posted by TSchilling at 5:32 PM Comments (0)
My interest was further peaked upon reading the Cleveland Fed's Economic Commentary for December, 2005. One of the charts showed saving as something just under seven percent of GDP. And while accurate, it certainly didn't agree with everything grabbing the headlines in the media.
Now one of the good things about working at the Fed is that there's always an economist around when you need one. I went to one of our research staff and asked for his take on the seemingly contradictory information. The short version of his explanation was in "what's in the data."
Finally, Don Bodreaux at Cafe Hayek discussed essentially the same issue in his February 8 post titled On American's Consumption and Saving. Bodreaux pointed out that many things the average person would consider "investment" gets counted as savings. My colleague pointed out that because Personal Savings is arrived at by subtracting spending from income, it's easily possible to run negative because of things that probably come out of savings (like a down payment on a new car).
But ultimately, the question for educators is "how do we explain this to the students?" The answer is that we have to get them to think about what data does and does not say. The issue of spending beyond income is important--both on a personal and national level. But one has to be careful not to overreact as to the immediacy, nor to underplay the importance of savings in providing capital for future investment. There's one side of the issue, and there's the other. There are no simple answers.
(Maybe there's a reason President Truman wished for a one-armed economist.)
Your comments are welcome.
Posted by TSchilling at 5:32 PM Comments (0)
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